SHFE Copper Premiums Soar on Tight Supply and Pre-Holiday Demand
The SHFE copper premiums rose sharply on Wednesday, driven by tight supply and pre-holiday stockpiling. The LME copper opened at $14,782.5/mt, initially drifted higher to touch $14,799/mt, then the price center drifted lower to $14,728/mt, before drifting higher again to close at $14,783/mt, up 0.81%. Trading volume reached 20,500 lots, and open interest stood at 264,000 lots, down 3,223 lots from the previous trading day, reflecting short covering.
The most-traded SHFE copper 2610 contract opened and touched a high of 111,840 yuan/mt, then drifted lower to 111,490 yuan/mt, and consolidated before closing at 111,610 yuan/mt, up 0.35%, with trading volume of 22,600 lots and open interest of 142,300 lots, down 4,459 lots from the previous trading day, reflecting short covering.
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Spot premiums are expected to have further upside today, with available spot supply in Shanghai remaining tight and some downstream processing enterprises still having pre-holiday stocking demand. However, copper prices are already at elevated levels, the backwardation spread has widened, and spot premiums have climbed rapidly, significantly increasing procurement costs for downstream and end-user enterprises.