SHFE-LME Copper Price Ratio Weakening Triggers Premium Retreat
This week saw a weakening of SHFE/LME copper price ratio, pushing premiums back from recent highs. The current ratio stands at 1.1247, resulting in an import loss of about 1,385.43 yuan/mt, with the loss expanding by approximately 857 yuan/mt compared to last week.
The LME copper backwardation structure for August widened this week, with a carry spread between August and September dates at −$61.53/mt. This has increased suppliers' willingness to offer cargo. Meanwhile, downstream consumption demand was poor due to the surge in copper prices.
High premiums in China's domestic market previously attracted cancelled warrants from LME Asian warehouses, which gradually arrived in China, causing congestion at Shanghai Port. Some export cargo also put pressure on spot prices, leading to weakened market spot premiums.