SHANGHAI, Aug. 14 (SMM) – Yangshan copper premiums published by SMM to track premiums on imported copper to China climbed to $85-100 per tonne today even though the Chinese yuan devaluated for three straight days. Will this upward trend continue?
The higher Yangshan copper premiums were mainly driven by the increasing SHFE/LME copper price ratio which boosted copper imports. The copper price ratio once shot up to 7.6 this week.
Some worried that the devaluation of Chinese yuan may squeeze import profits and curb copper importing activities, in turn pushing down premiums on imported goods.
However, the PBOC has moved to ease the fears triggered by the weakening yuan, saying that there is no basis for persistent and substantial devaluation.
“Some traders engaging in arbitrage between Shanghai and London markets hurried to make settlement after the yuan weakened, but with the yuan’s exchange rate showing a sign of stabilizing, we believe window will open again for arbitrage, so we remain relatively optimistic about import premiums in the near term,” SMM analyst said.
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