China Copper Premiums Climb on Tight Spot Availability, Improving Arbitrage

SHANGHAI, Apr. 23 (SMM) – Spot premiums for imported copper have sprung up to $100-120 per tonne in China amid an ongoing tightness in spot availability and an improving price ratio between Shanghai and London markets.

Yangshan copper premiums, published by Shanghai Metals Market daily, have started climbing after stabilizing at $70-90 per tonne early last week.

Domestic physical copper is trading at a premium of 440-600 yuan ($71-97) per tonne today to the nearby Shanghai Futures Exchange (SHFE) contract, down 145 yuan from yesterday, according to SMM’s pricing data.

An estimated amount of 150,000 tonnes of copper was delivered to Shanghai’s bonded warehouses from March 15 to April 15 by Chinese smelters and has been locked there since, creating a tightness in the domestic spot market.

At the same time, Chinese authorities’ crackdown on repeated L/C issuance backed by a same warehouse receipt or bill of lading has increased physical demand from financing-deal makers.

Demand from downstream users, however, has been deterred by high domestic premiums, according to SMM’s research team. Many of them have held up purchases, anticipating spot supplies to improve soon with more imports coming on better arbitrage.