Shanghai Spot Copper Premium Hits Record 2,615 Yuan a Ton
Key Facts
The average SMM #1 spot copper cathode premium in Shanghai over SHFE 2611 hit a record 2,615 yuan a ton on November 6, up 515 yuan from the previous trading day, according to Shanghai Metals Market’s assessment. The premium ranged from 2,480 to 2,750 yuan a ton, signaling intense competition for metal available for near-term delivery. SMM said limited spot supply, a shortage of raw materials and smelter maintenance had tightened supply. The diversion of some overseas supplies to the United States and delays to import shipments also weighed on the Chinese market. The jump comes as the November contract nears delivery, while spot-market premiums remained elevated amid a widening spread between nearby and deferred futures contracts.
The premium’s rise extended through the week, with its average increasing 1,350 yuan a ton since the start of the week, according to SMM. The futures price spread between SHFE 2611 and 2612 widened from a range of 900–1,000 yuan a ton at the start of the week to 1,900–2,260 yuan on Friday. The premium had been about 1,265–1,300 yuan a ton at the start of the week, before its average climbed to 1,900 yuan on Wednesday, according to SMM’s weekly review. The company said a midweek decline in copper prices allowed some lower-priced shipments to trade quickly, before suppliers became more firm on prices. The widening gap between the two contracts reflects stronger demand for nearby metal at a time when the market is struggling to secure spot supplies.
Social copper inventories in major Chinese regions stood at about 62,600 tons on November 5, compared with 134,400 tons in the same period last year, a year-over-year decline of more than 70,000 tons, according to SMM data. In another sign of limited metal available for delivery, copper warrants at the Shanghai Futures Exchange fell by 2,247 tons on November 6 to 4,327 tons. SMM said the diversion of overseas supplies to the United States weighed on Chinese inventories, while China’s cumulative copper cathode imports totaled 2.1383 million tons in January–September, down 16.34% year over year. On November 5, more than 70% of copper inventories registered with the London Metal Exchange were in U.S. warehouses. These factors are reducing the volume of supply available domestically as Shanghai delivery dates approach.
Smelters are also facing pressure from a shortage of concentrates; Reuters said a severe shortage of raw material had forced them to accept negative spot treatment and refining charges for nearly two years, effectively paying to secure supplies. Reuters added that lower sulfuric acid prices had weakened an important source of profit and that some operators were extending maintenance shutdowns through the quarter. Chinese smelters account for more than half of global refined copper output, according to a Reuters report published on November 5, placing their difficulties in the broader context of the supply market.
The pressure from premiums has also extended to processing companies. SMM said some companies had partially halted production lines because of higher costs and poor economics for buying copper. The company said some processing facilities had already stopped part of their lines, with downstream purchases potentially set to decline further. Meanwhile, an analyst at Zijin Tianfeng Futures linked the ongoing shortage to lower output by domestic smelters and limited overseas supplies, including from Africa and Russia. He said manufacturers were buying to meet their near-term needs. The developments show how the metal shortage is passing from inventories and delivery into industrial buyers’ costs and operating decisions, amid the factors cited by SMM and coverage reported by Bloomberg.
On prices, EL7 data showed HGUSD copper closed at $6.27 a pound on November 5, compared with $6.429 on November 4. This offers a different picture from the Shanghai premium, which measures the cost of obtaining spot copper over a specific futures contract, rather than the direction of copper prices alone. Bloomberg reported on November 5 that the Shanghai premium reached 1,900 yuan a ton on Wednesday, its highest level since 2021, as buyers competed for available physical metal. The coverage also said Shanghai’s December contract recorded a premium of $880 a ton over January, the deepest price spread between the two contracts since 2022. These indicators highlight tight nearby supply in the Chinese market, even as the copper close recorded in EL7 data declined.
SMM forecast domestic copper cathode production of 1.0821 million tons in November, down 2,600 tons, or 0.42%, from October, and said the completion of maintenance and the ramp-up of new capacity would remain constrained by tight raw material supplies. November 16 is scheduled to be the last trading day for SHFE 2611, with delivery set for November 17–18. SMM said the shift to SHFE 2612 as the pricing benchmark could keep Shanghai premiums elevated if supply remains tight. The company linked a subsequent decline in premiums to delayed imports entering the market and the return of delivery shipments. It also expected premiums to remain high the following week, with a possible decline if imported copper flows gradually increase and processing companies make deeper production cuts, while additional shipments were expected to arrive at ports over the weekend.