Why did spot premiums for copper cathode in Shandong decline throughout October? [SMM Analysis]

After the National Day holiday in October, copper prices centered around 76,800 yuan/mt, slightly lower than before the holiday but significantly higher than in September. This was mainly due to a series of favorable domestic policies introduced before the National Day. However, spot premiums for copper cathode in Shandong continued to decline after the holiday. What is the current supply and demand situation?

According to SMM, only Zhongjin Lingnan and Yanggu Xiangguang Jinda among the four major refineries in Shandong are operating normally, while Shandong Humon Smelting Co., Ltd. and JCC Guoxing are under maintenance. Besides long-term contracts, spot order supply is limited. Additionally, refineries in Shandong are also transporting goods to the south and north. Therefore, from the supply side, the supply of copper cathode in Shandong is not abundant compared to normal conditions.

From the consumption side, processing enterprises in the province reported weak orders. By industry, the copper pipe & tube industry is in a seasonal off-season, with orders only slightly increasing when copper prices fall; the copper rod industry is also not performing well, with a major copper rod factory in the province recently halting production to digest inventory. According to SMM, processing enterprises indicated that current copper prices remain high, further pressuring already weak demand.

Overall, post-holiday domestic consumption levels were poor, with social inventory of copper cathode significantly increasing after the holiday and only starting to decrease in late October, with the decrease being weaker than in previous years. Additionally, a large volume of overseas copper cathode arrived after the holiday, leading to stockpiling in the foreign trade market. Yangshan copper premiums plummeted, and many traders considered directly importing goods into the domestic market, significantly impacting spot premiums. Therefore, weak demand combined with the influence of the Shanghai area led to the continuous decline of spot premiums for copper cathode in Shandong.