Copper stocks decrease on profitable import arbitrage
Shanghai-bonded copper stocks in September declined for the fourth consecutive month as an open import copper arbitrage window in China attracted bonded stocks into the domestic market.
Copper stocks in Shanghai-bonded warehouses in September declined by 8% month on month to 392,000-400,000 tonnes, and were also down 21% year on year.
The volume of Shanghai-bonded copper stocks in September was the lowest since February 2017.
“Positive import arbitrage drove copper premiums up in September and that also led to bonded stocks entering into the domestic market,” a major copper trader based in Shanghai said.
Fastmarkets MB’s calculations indicate that market participants bringing physical copper into China on September 18 could make a profit of $116.34 per tonne by doing so, while on August 17 the profit was $4.97 per tonne.
Import arbitrage profit between the three-month LME copper contract and the Shanghai spot copper cathodes price drove the copper premium cif...