Domestic supplies have already been reduced as a result of the fall in prices.
A source from one of the leading smelters told Metal Bulletin that his company has already reduced deliveries into the market due to the pressure from falling cathode prices.
“I'm not sure whether others will follow suit, but I see less cargoes from our plant,” the source said.
Copper prices have fallen to six-year lows amid Chinese stock market volatility, slow Chinese demand and the expectation of interest rate hikes in the US.
Copper prices on the Shanghai Futures Exchange closed at 38,940 yuan per tonne as of 11:30am on Thursday, up from a low of 37,790 yuan per tonne hit last Friday.
Metal Bulletin sister publication Copper Price Briefing assessed London Metal Exchange premiums at $75-90 per tonne on an in-warehouse Shanghai
basis on Wednesday July 29, up from $60-75 per tonne a week ago.
“The material being traded in the market now is more from the import side. There is very limited domestic material available these days,” a Shanghai-based trader said.
The open arbitrage between Shanghai and London has encouraged import activity, however.
The increase in supply from the import side has eased domestic tightness slightly, dragging down local physical premiums, which have declined to about 150 yuan per tonne.