Copper Prices Shift Lower, While Spot Premiums/Discounts in Shandong Continue to Decline [SMM Analysis]

       With only one week left in 2025, copper prices this week saw a slight downward shift in their center compared to last week. However, spot premiums in Shandong continued to decline. What is the specific supply and demand situation in the market?

       In terms of supply, both Hengbang and JCC Guoxing resumed normal production in December after maintenance, and all smelters in Shandong restored regular copper cathode supply. As a result, the spot market experienced a supply surplus in December. Additionally, major smelters faced year-end inventory clearance tasks. Facing weak market demand, they opted to sell at lower prices to generate cash, even as copper prices shifted downward.

       From the consumption side, although the center of copper prices moved slightly lower WoW this week, it remained above 74,000 yuan/mt, which is not considered a low-price range by downstream buyers. Coupled with year-end accounting needs of end-user enterprises, downstream procurement demand remained weak except for some just-in-time procurement. According to SMM, orders from downstream copper processing enterprises were lukewarm, and they were also unwilling to stockpile large inventories, leading to weak demand for copper cathode procurement.

       Overall, year-end demand for copper cathode procurement remained weak. Smelters actively reduced premiums to boost sales and lower inventory levels. However, downstream enterprises did not increase procurement volumes despite the decline in premiums, maintaining just-in-time procurement. Although smelter inventory levels decreased, they did not meet expectations. Therefore, even with a slight downward shift in copper prices, spot premiums in Shandong continued to decline at year-end. SMM expects the supply surplus to intensify in the near term, but as January begins, smelters will face less inventory clearance pressure, and spot premiums are unlikely to continue falling significantly.