Copper Prices Bounce as Tight Physical Supply in China Deepens

Copper prices rebounded on Monday, recovering part of the previous week's steep losses as risk appetite steadied, the dollar slipped, and tight physical supply in China came back into focus, according to Mining.com.

Comex copper for December delivery traded at $6.3550 a pound ($14,010 a tonne) late morning in New York, up 1.9% on the day. On the London Metal Exchange, three-month copper rose 0.9% to $13,890 a tonne, following a 2.7% drop last week that marked its steepest weekly decline since March. In Shanghai, the most-traded contract gained 0.5% to 107,430 yuan ($16,096) a tonne.

Surging Premiums and Falling Inventories

Physical tightness in China intensified sharply over recent weeks. The Yangshan copper premium climbed to a record $230 a tonne on Monday, while spot premiums in Shanghai tripled over a two-week period to a record 2,615 yuan ($392) a tonne according to the Shanghai Metals Market. Concurrently, copper stocks in Shanghai Futures Exchange-monitored warehouses fell more than 24% last week to 33,848 tonnes, which represents less than a day of Chinese consumption.

Market participants noted that major traders, including Trafigura, have approached Asian producers and traders to secure large volumes for November and December delivery. Meanwhile, Chinese smelters continue to struggle with sourcing feedstock concentrates and scrap.

Key facts

• Comex copper for December delivery rose 1.9% to $6.3550 a pound ($14,010 a tonne).
• The Yangshan copper premium reached a record $230 a tonne on Monday.
• Shanghai Futures Exchange-monitored warehouse stocks fell over 24% last week to 33,848 tonnes.
• Spot premiums in Shanghai tripled over two weeks to 2,615 yuan ($392) a tonne.