Copper extended its rebound on Tuesday, with LME three month metal at 13,939 dollars a tonne, up 0.31 percent in early trade, after a Monday session in which the physical squeeze in China pushed import premiums to records. The Yangshan copper premium, the price Chinese buyers pay over the LME price for imported metal, rose to a record 230 dollars a tonne on Monday, according to Reuters reporting carried by Mining.com.
The inventory side is thinner than the premium suggests. Copper stocks in Shanghai Futures Exchange monitored warehouses fell more than 24 percent last week to 33,848 tonnes, the lowest in almost three years and, on industry estimates, less than a day of Chinese consumption. Spot premiums in Shanghai tripled over two weeks to a record 2,615 yuan a tonne, according to Shanghai Metals Market, while Fastmarkets import premiums jumped more than 40 percent to 195 to 210 dollars a tonne, the highest in data back to 2017.
Supply is failing at several points at once. Chinese smelters are struggling to source concentrate and scrap, and customs data released on Tuesday showed copper concentrate imports down 12 percent in October with metal imports up only 3.5 percent. A crackdown on illegal mining in the Democratic Republic of Congo, China’s biggest source of refined copper, in which the government seized more than 500 trucks and several thousand tonnes of copper and cobalt, threatens to crimp supply further. Trafigura has spent two weeks approaching producers and traders across Asia seeking large volumes for November and December delivery and outbidding rivals to secure cargoes, Bloomberg reported.
The futures tape is not confirming the squeeze. Comex copper bounced 1.9 percent on Monday to 6.3550 dollars a pound after losing 2.7 percent last week, its steepest weekly decline since March, and the site tables carried it at 6.31 dollars on Tuesday, down 0.29 percent. Citi cut its three month copper forecast to 13,300 dollars from 14,500 dollars, citing weakening AI sentiment, and ING’s Ewa Manthey cautioned that Monday’s bounce does not necessarily mark the end of the correction. The divergence is the story: paper positioning is being cut while the physical market in the largest consumer is at its tightest in years.