Copper Supply Tightens in North China on Smelter Maintenance

SHANGHAI, Aug. 6 (SMM) – Copper supply fell short in north China’s physical markets after several copper smelters started maintenance operations, SMM learned.

Sources contacted by SMM said Yunnan Copper’s Chifeng Smelter, Chifeng Jinjian Copper, and Western Mining all suspended production for maintenance, tightening copper supply in physical markets of north China.

This supply shortage was exacerbated when Shandong-based smelters that usually ship goods to Tianjin’s market stepped up exports, attracted by the low SHFE/LME copper price ratio.

SMM was told that the number of tradable goods at north China warehouses have fallen to just 600 tonnes.

A limited amount was shipped from Shandong to Tianjin, but quotes were held elevated, with some offered at a premium of 150 yuan per tonne, providing that buyers have to pick up goods from suppliers by themselves.

This tight supply expanded price gap between Shanghai and north China to over 200 yuan per tonne, exceeding the costs for transporting goods between the two regions. The wide price spread allowed some to sell Shanghai’s goods to north China.

A majority of copper in north China market was consumed by enterprises downstream, with transactions between merchants rarely seen. Therefore, downstream producers are now mainly purchase as needed given low volatility in copper prices and limited supply.