The copper price has really driven up market sentiment in the past two days. On September 17th, the spot copper price of Changjiang No.1 was reported at 108,680 yuan, rising by 650 yuan. On the 18th, the price soared directly to 110,290 yuan, increasing by 1,610 yuan in a single day, and the cumulative increase over two days reached 2,260 yuan. You should know that on September 10th, the copper price was still at 112,530 yuan, and on September 15th, it dropped to 107,790 yuan. Within just a few days, it dropped by 4,740 yuan, and then recovered by 2,260 yuan. This rebound is not insignificant. What's more notable is that the spot premium is also rising. On the 17th, the premium of Changjiang spot copper over Shanghai copper was approximately 730 yuan, and on the 18th, it expanded to 790 to 830 yuan, with an average of 810 yuan.
The price increase and the simultaneous strengthening of the premium indicate that the market is not solely driven by the futures market. Those who have copper in stock have begun to dare to hold the price. Why did this abnormal trend occur? Could it be that the world suddenly ran out of copper? At present, it is not possible to draw such a conclusion. The inventory has not disappeared, but it is unevenly distributed. The inventory of the US exchange is approximately 767,000 short tons, accounting for a high proportion of the global visible inventory.
The inventory of the London Metal Exchange has also risen to 255,900 tons, while the domestic social inventory is only about 85,000 to 97,000 tons, and the warehouse scale is not large. The spot supply that can be timely delivered to China, Europe, and Southeast Asia is relatively tight. The expectation of tariffs has added fuel to the fire. Some supplies were absorbed by the US market, and the premium of Xiangshan copper rose from around 80 US dollars to over 100 US dollars. Importers wanted to ship the goods to China, and the cost was naturally higher.
To put it simply, this is more like a misplacement of goods between different regions, not a true global shortage. The ore end is also not easy. The processing fee of copper concentrate has dropped to negative values, and even negative 225 US dollars per ton has been reached in the market. Smelters buying ore not only cannot earn processing fees but may even incur losses. With the ore shortage, the supply elasticity of crude copper and refined copper will decrease, and the price will naturally have support. The foreign market gave a favorable wind. The US Federal Reserve raised interest rates by 25 basis points at its September meeting.
The market had already digested the expectation before, and after the announcement, the US dollar fell, and US bond yields dropped. Copper futures in London rose by approximately 1.5%. However, the foreign market did not completely lose control. The domestic market was significantly stronger than the foreign market, which cannot be ignored. Is this the beginning of a bull market main upswing? It may not be. Institutions generally place the core range of Shanghai copper at 105,000 to 115,000 yuan. The current price is already close to the upper limit. Downstream enterprises are not frantically buying copper, but more are replenishing inventory according to orders. The price difference between refined and scrap copper has narrowed, and the advantage of scrap copper as a substitute has declined, indicating that the real demand has not fully erupted. What will be seen next? Can the copper futures in London rise above 14,875 US dollars? Can Shanghai copper increase significantly with a noticeable increase in positions? Will the window of US refined copper tariffs bring new changes? The three events have not been fully realized. Raising the price above 110,000 yuan is risky. For enterprises in the cable, motor, and air conditioning industries, don't rush to stock up fully. You can lock the price in batches according to orders. For those who collect scrap copper, this rise is more like an opportunity to sell in batches. Don't clear all at once or hold on stubbornly. The market now has a bottom and a trend, but it is still lacking a fire to close the eyes and look bullish.
