China's Copper Market Sees Import Parity Inversion and Spot Premium Retreat

China's import parity inversion in the copper market has been notable lately, indicating a discrepancy between the cost of importing and producing copper within the country. This situation is coupled with a widening backwardation structure of near-term London Metal Exchange (LME) contracts, which means that buyers are willing to pay more for immediate delivery than future delivery.

Sellers in the imported copper market have become more active, offering their products at competitive prices due to mediocre downstream consumption demand. As a result, spot premiums have retreated from their highs, indicating a decrease in the premium paid by buyers over the base price of copper.

Despite this trend, the siphon effect from North America is expected to continue, limiting the replenishment of imported copper supply in China and supporting spot premiums on the downside. Additionally, some smelters have export expectations, making it crucial to closely monitor China's subsequent export situation.