FOCUS: Chinese copper trends may drive 2020 premiums down

Chinese spot copper premiums hit 10-month highs in September, but market participants doubt the uptrend can last and expect a drop in the annual benchmark premium for 2020.

Fastmarkets’ copper grade A cathode premium, cif Shanghai reached a peak of $65-82 per tonne on September 5 during the Antaike conference in the Chinese city of Qiqihar, the highest since November 2018. The premium stood at $65-80 per tonne as of September 18 and has remained at that level since September 16.
There are several drivers behind the rally, including arbitrage-related buying, improved downstream demand and a persistent drawdown in domestic stocks, which could provide further support to premiums during September and October.
Conference delegates believed the Shanghai premium could climb to $90 per tonne before hitting a ceiling because that level would probably trigger a transfer of cathodes to Shanghai from London Metal Exchange warehouses in Asia and thus ease the supply tightness.

Shanghai-bonded copper stocks were at their lowest since February 2016 at 334,000-337,000 tonnes as of September 9, according to Fastmarkets’ assessment. This is down by...

Published

Ellie Wang

October 04, 2019

09:17 GMT

Shanghai