This week (August 10-August 13), Yangshan copper premium warrant transaction weekly average price range was $91-104/mt (QP August, average $98/mt); B/L transaction weekly average price range was $87-99/mt (QP September, average $93/mt); EQ copper CIF B/L prices were $57-69/mt (QP September, average $63/mt). As of August 13, the exchange-rate-adjusted SHFE/LME copper price ratio for LME copper versus the SHFE copper 2608 contract stood at 1.128, with an import loss of around 1,004.08 yuan/mt, which narrowed by about 381 yuan/mt WoW. As of Thursday, the LME copper August-date backwardation structure widened from the same period last week, with the carry spread between August and September dates at -$117.45/mt. Currently, mainstream offers for ER registered copper B/L are around $85-95/mt; mainstream offers for registered copper warrants are around $100-105/mt; mainstream offers for EQ copper B/L are around $65-70/mt.
This week, Yangshan copper premiums trended weaker, as the SHFE/LME price ratio remained unfavorable, LME nearby contracts showed a steep backwardation structure, and rising copper prices dampened consumption, leaving downstream buying sentiment weak. However, supplier offers had not yet shown a clear retreat, and the divergence between buyers and sellers in the market gradually widened. In addition, according to SMM, the opening of the copper cathode export window in this round was mainly driven by the substantial backwardation structure in nearby LME contracts. Changes in SHFE and LME prices and term structures created export arbitrage conditions for some copper cathode, with export volume currently planned at about 20,000 mt. However, as the August contract approached delivery, copper cathode exports mainly flowed into China bonded zones.
According to SMM, as of Thursday this week (August 13), copper inventories in China bonded zones rose by about 4,100 mt WoW from the previous period (August 6) to 35,200 mt. Specifically, Shanghai bonded inventories rose by 4,200 mt WoW to 31,100 mt, while Guangdong bonded inventories fell by 100 mt WoW to 4,100 mt. The main reasons for the increase in bonded zone inventories were: 1. The recent opening of the export window created export arbitrage conditions for some copper cathode, causing cargoes to concentrate in bonded zones; 2. Previously, cancelled warrants from LME Asian warehouses arrived at ports in succession, further lifting inventory levels.
Looking ahead, the market will wrestle with whether the SHFE/LME price ratio can recover and with the supply-demand pattern. On the supply side, supply will be shaped by short-term import arrivals and higher exports, while medium- and long-term supply will remain constrained by the US siphoning effect. On the demand side, weak consumption has left downstream buyers with low psychological expectations for transaction prices. Traders are expected to maintain a strong wait-and-see sentiment, with the tug-of-war between buyers and sellers set to grind on. In addition, going forward, as the SHFE and LME term structures are further adjusted, the copper cathode export window and cargo flow directions will still need to be continuously monitored.
![Widening Price Spread Between Futures Contracts, Weak Downstream Consumption, Spot Premiums Continue to Fall [SMM South China Spot Copper Cathode Weekly Review]](https://imgqn.smm.cn/usercenter/oeWiG20251217171714.jpeg)
