East China Copper Inventory Divergence Drives Market Uncertainty

The copper market in east China is experiencing an inventory divergence between Shanghai and Jiangsu. According to SMM, social inventory in Shanghai decreased by 11,000 mt WoW from Monday, while inventory in Jiangsu increased by 3,200 mt WoW. The rapid destocking in Shanghai was driven by the decline in copper prices and spot premiums on the previous trading day, which prompted downstream dip-buying and solid warehouse withdrawals. In contrast, arrivals in Jiangsu were concentrated, leading to an increase in inventory.

On the demand side, buying picked up after yesterday's price pullback but intraday consumption enthusiasm has cooled, with downstream buyers returning to just-in-time procurement and remaining reluctant to accept current premium levels. The month-over-month backwardation spread remains elevated, and suppliers' warehouse transfer and selling pace will continue to affect spot premiums.

Looking ahead to tomorrow, SMM expects spot prices against the SHFE copper 2609 contract to remain rangebound, with the center possibly edging slightly lower. However, room for a further sharp decline is relatively limited.