Copper Prices Soar, Suppressing Demand and Diverging Payable Indicators

Copper prices have been steadily rising since the beginning of August, reaching historically high levels and staying there. However, this has led to a slowdown in procurement demand for No.1 and No.2 copper, causing transaction payable indicators to pull back somewhat. As of mid-August, the payable indicator for No.1 copper transactions was around 96%-97%, while US No.2 copper was about 95.5% and European No.2 copper mainly traded around 94.5%-95%. On the other hand, the price of bare bright copper found notable downside support due to tight supply and strong direct substitution properties for copper cathode, with its quoted payable indicator holding at a high of 98.5%-99% without visible loosening.

The market in the first half of August was characterized by 'tight supply and cautious demand'. The rapid rise in copper prices boosted ex-China suppliers' willingness to sell, but limited spot availability caused sellers to hold prices firm. Downstream enterprises leaned towards just-in-time procurement due to historically high copper prices, resulting in constrained overall volume expansion.

Looking ahead to the second half of August, it is expected that downstream enterprises will continue to rely mainly on just-in-time procurement, and social inventories of copper scrap in some regions may accumulate slightly. The payable indicator for bare bright copper is expected to remain high due to tight supply and substitution demand, while No.1 and No.2 copper may face pullback pressure on prices.