According to SMM data, the average spot discount for SMM #1 copper cathode in north China was 38 yuan/mt in August 2024, up 91 yuan/mt MoM; the average spot premium for SMM #1 standard-quality copper was 3 yuan/mt, with a price spread of 41 yuan/mt. As of September 5, the average spot premium for SMM #1 copper cathode in north China was 20 yuan/mt, and the average spot premium for SMM #1 standard-quality copper was 71 yuan/mt, with a price spread of 51 yuan/mt.
Reviewing the spot premium/discount spread between north China and Shanghai for standard-quality and copper cathode, SMM data shows that the average price spread has been 207 yuan/mt since 2023. The price spread was higher amid large discounts. However, since July, the price spread has narrowed significantly due to the combined factors of supply contraction and improved demand in north China.
In north China, most smelters have suspended purchasing copper anode from south China due to lower processing fees and transportation cost issues. However, the resumption of production by previously upgraded and overhauled suppliers has alleviated some pressure, and the north China market has returned to primarily executing long-term contracts, with processing fees stabilizing.
Since July, two major smelters in north China have undergone maintenance, leading to a production decline of over 60,000 mt of copper cathode, thus limiting local supply for the past two months. On the demand side, as copper prices gradually declined, downstream consumption was boosted. Additionally, the implementation of the Fair Competition Review Regulations on August 1 impacted the secondary copper industry, causing some secondary copper rod consumption to shift to copper cathode rod. Consequently, the overall operating rate of processing enterprises increased and remained high, driving up demand for copper cathode. With support from supply and demand, holders have strong confidence in maintaining prices, leading to a continuous rise in spot premiums for copper cathode in north China and a narrowing price spread with Shanghai.
Entering September, the downward trend in copper prices continues, coupled with the traditional peak consumption season, leading to positive demand expectations. However, SMM understands that all smelters in north China will resume production in mid-September, which is expected to put pressure on spot premiums for copper cathode and gradually widen the price spread with Shanghai.
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