LME Backwardation Structure Widens, SHFE/LME Price Ratio Unfavorable, Market Remains Sluggish [SMM Yangshan Spot Copper]

Looking ahead to tomorrow, available supply in the Shanghai region is expected to remain tight, and with some downstream processing enterprises still having pre-holiday stockpiling demand, spot premiums continue to receive strong support. Although a small amount of imported copper locked in at favorable SHFE/LME price ratios after the import window opened earlier is gradually arriving, the overall volume is limited, and its supplementary effect on market supply is expected to be relatively modest in the short term, making it difficult to significantly ease the current supply tightness. Therefore, spot premiums are expected to have further room to rise tomorrow. However, copper prices are already at elevated levels, the backwardation between prompt and forward months has widened simultaneously, and spot premiums have climbed rapidly, leading to a notable increase in procurement costs for downstream and end-user enterprises, which may gradually reduce their acceptance of high premiums. If premiums continue to rise rapidly, some downstream buyers may turn to a wait-and-see stance, just-in-time procurement may decrease, and market trading activity may pull back. Market participants are advised to monitor the risk of negative feedback on the demand side amid the combined effects of high copper prices, high backwardation, and high premiums.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, available supply in the Shanghai region is expected to remain tight. Coupled with the persistent pre-holiday stockpiling demand from some downstream processing enterprises, this continues to provide strong support for spot premiums. Although some imported copper locked in at favorable SHFE/LME price ratios after the import window opened earlier is gradually arriving, the overall volume is limited. The supplementary effect on market supply is expected to be relatively modest in the short term, making it difficult to significantly ease the current supply tightness. As a result, spot premiums are expected to have further room to rise tomorrow. However, copper prices are already at elevated levels, and the backwardation spread between futures contracts has widened simultaneously. Combined with the rapid climb in spot premiums, procurement costs for downstream and end-user enterprises have increased markedly, and their acceptance of high premiums may gradually decline. If premiums continue to rise rapidly, some downstream buyers may turn to a wait-and-see stance, reducing just-in-time procurement, and market trading activity may pull back. Market participants are advised to monitor the risk of negative feedback on the demand side amid the combined effects of high copper prices, deep backwardation, and elevated premiums.

SMM Analysis: According to data from the General Administration of Customs, China imported 210,200 mt of copper cathode in August 2026, down 14.24% MoM and down 20.48% YoY...