H2 North China Copper Cathode Spot Premiums/Discounts First Rose Then Fell, Winter Consumption to Depend on Copper Prices [SMM Analysis]

As of now, North China copper cathode spot premiums/discounts in H2 2024 have shown a trend of first rising and then falling. According to SMM prices, the average spot discount for #1 copper cathode in North China was 128.7 yuan/mt in July, 38.2 yuan/mt in August, a premium of 3.2 yuan/mt in September, and a discount of 142.2 yuan/mt in October, down 145.4 yuan/mt MoM.

Reviewing Q3, the rise in premiums/discounts was mainly supported by the resonance of supply and demand. Starting in July, two major supplying smelters in North China underwent maintenance, leading to a production decline, affecting copper cathode production by over 60,000 mt in two months. On the demand side, the overall decline in copper prices boosted consumption; the implementation of the Fair Competition Review Regulations on August 1 led to some secondary copper rod consumption shifting to copper cathode rod; subsequently, as the peak consumption season began, domestic copper cathode inventories showed continuous destocking, strengthening spot premiums/discounts.

Entering October, due to the National Day holiday when many downstream operations were suspended, copper cathode inventories accumulated after the holiday, and spot premiums/discounts fell sharply. Downstream consumption appeared weak, but some large processing enterprises had rigid demand to meet annual plans. With copper prices fluctuating rangebound, the market entered a lukewarm state, and North China spot premiums/discounts stabilized.

Entering November, the traditional "September-October peak season" ended, and consumption began to shift to the off-season. As winter approaches, northern cities often face production and transportation restrictions due to environmental pollution and rain and snow weather. Therefore, North China demand will highly depend on copper prices. If copper prices do not show a significant decline, consumption is expected to remain lackluster.