With Support From Supply and Demand, How Long Can North China Copper Cathode Spot Premiums Remain Firm? [SMM Analysis]

Published: Sep 6, 2024 11:27

Source: SMM

Save

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.

Market forecast Market review

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

3 hours ago

Yingkou Jianfa Shenghai Phase I 300,000 mt Copper Cathode Project Smelting Furnace Starts Production, Pyrometallurgy System Enters Furnace Drying Stage

At 9:58 on September 12, the core smelting furnace of the pyrometallurgy system at Yingkou Jianfa Shenghai Nonferrous Metals & Chemicals Co., Ltd.'s multi-metal recovery project was successfully ignited, officially entering the furnace drying stage and marking a key step toward full-line commissioning and production. Public information shows that the Yingkou Jianfa Shenghai polymetallic complex gold-silver ore comprehensive recovery technology upgrade, relocation, and expansion project uses copper concentrates as its main raw material, with an overall planned capacity of 600,000 mt/year of copper cathode to be built in two phases, with capacity of 300,000 mt/year in each phase. Phase I is designed to produce 300,000 mt/year of copper cathode and 1.18 million mt/year of sulphuric acid, along with supporting systems for smelting, converting, anode refining, electrolysis, slag beneficiation, and precious metal recovery. After this ignition, the project will carry out standardized furnace drying and hot-state integrated trial runs across the entire system to verify equipment, instruments, interlocks, and automatic control systems. The project has not yet formally started raw material feeding and production; after furnace drying and system commissioning are completed, it will further advance the commissioning of Phase I's 300,000 mt/year copper cathode capacity. If the project is successfully brought into production, it is expected to increase copper smelting capacity in North China and further boost domestic demand for copper concentrate raw materials.

3 hours ago

19 hours ago

Alchemy Resources Starts Drilling Copper-Gold Targets at Yellow Mountain

Alchemy Resources announced on September 11 that reverse-circulation drilling has commenced across its Yellow Mountain and Overflow projects in New South Wales, Australia, with up to 15 holes planned during the latest exploration campaign. At the 80%-owned Yellow Mountain project, drilling will test extensions to previously identified copper-gold and polymetallic mineralisation, as well as two previously undrilled geophysical targets. Previous drilling at Yellow Mountain returned an intersection of 113 metres grading 1.17% copper equivalent, comprising 0.33% copper, 0.37 g/t gold, 24.3 g/t silver, 0.86% lead and 1.23% zinc. The latest drilling campaign is designed to test whether the known mineralised system extends into newly identified target areas. The program will also include drilling at the Overflow project, where Alchemy is targeting extensions to existing mineralisation along strike and at depth. Overflow currently hosts an inferred mineral resource of approximately 342,000 ounces of gold equivalent and contains gold, silver, copper, lead and zinc mineralisation. The commencement of drilling provides a near-term test of the scale and continuity of mineralisation at Yellow Mountain. The previously reported broad copper-gold-polymetallic intersection indicates potential for a sizeable mineralised system, while the newly defined geophysical targets provide additional exploration upside. Drilling results will be important in determining whether the mineralised footprint can be materially expanded.

19 hours ago

Freeport CEO Signals Likely Go-Ahead for $4.5 Billion Bagdad Copper Expansion

Freeport-McMoRan Chief Executive Officer Kathleen Quirk has indicated that the company expects to move forward with the proposed expansion of its Bagdad copper mine in Arizona, marking a stronger commitment to the project ahead of a formal investment decision. Speaking at the Jefferies Global Industrials Conference on September 10, Quirk said the project still requires input from Freeport's board but that she expects the company will proceed. She described the expansion as a roughly three-year construction project and noted that no major permitting hurdles are expected. Freeport's latest project estimates put capital expenditure for the Bagdad expansion at approximately US$4.5 billion, around 30% above the previous US$3.5 billion estimate, reflecting cost escalation, scope changes and additional engineering. The project would more than double concentrator capacity at Bagdad and is expected to add approximately 200–250 million lb, or around 91,000–113,000 tonnes, of copper production annually, alongside an additional 10–12 million lb of molybdenum. Bagdad currently has a reserve life exceeding 80 years. Freeport's Q2 2026 regulatory filing had described the project as being prepared for a potential investment decision during the second half of 2026. The latest comments therefore represent a more positive signal from management on the likelihood of development, although formal board approval has not yet been announced. A decision to proceed with Bagdad would represent one of Freeport's most significant near-term copper growth investments in the US. The potential addition of more than 90,000 tonnes per year of copper would materially increase Freeport's US output, although first production would remain several years away given the expected construction period. Attention will now turn to formal board approval and a final investment decision.

19 hours ago