Divergence Between Buyers and Sellers Continues in Copper Market
The copper market saw continued divergence between buyers and sellers this week (August 10-13), as evident from recent trade data. The Yangshan copper premium warrant transaction weekly average price range was $91-104/mt, while B/L transactions averaged $87-99/mt. Meanwhile, the exchange-rate-adjusted SHFE/LME copper price ratio for LME copper versus the SHFE copper 2608 contract stood at 1.128, with an import loss of around 1,004.08 yuan/mt.
The opening of the copper cathode export window in this round was mainly driven by the substantial backwardation structure in nearby LME contracts. As a result, some copper cathode exports flowed into China bonded zones. According to SMM, as of August 13, copper inventories in China bonded zones rose by about 4,100 mt WoW from the previous period (August 6) to 35,200 mt.
The recent increase in bonded zone inventories is attributed to two main factors: the opening of the export window and the arrival of cancelled warrants from LME Asian warehouses. Looking ahead, the market will wrestle with whether the SHFE/LME price ratio can recover and with the supply-demand pattern. Traders are expected to maintain a strong wait-and-see sentiment.