Photo: Copper ingots at the El Teniente mine in Chile / Nicolas Schubert, Wikimedia Commons / CC BY 2.0
Chinese factories that need copper right now are paying the biggest premium in years to get it, a sign that supplies of immediately available metal are running short in the world’s biggest copper market.
The premium for spot copper in Shanghai jumped to 1,900 yuan a ton over futures on Wednesday, the highest since 2021, Bloomberg reported, citing Shanghai Metals Market data. SMM put the average premium in a range of 1,700 to 2,100 yuan a ton, up 600 yuan from the day before.
In plain terms: when a factory needs copper delivered today, it has to pay extra on top of the futures price. That extra amount keeps climbing because smelters in China have cut production and less metal is arriving from overseas suppliers in places like Africa and Russia. “Fabricators are buying hand to mouth,” Zhou Xiaoou, an analyst at Zijin Tianfeng Futures, told Bloomberg.
The squeeze is showing up in futures trading too. December copper in Shanghai is trading at an $880-a-ton premium to January, the widest gap since 2022. Traders call that “backwardation” — buyers pay more for sooner delivery, the opposite of a normal market — and it happens when near-term supply is tight. The Yangshan premium, a gauge of what Chinese buyers will pay for imported copper, has hit a record.
Copper prices have rallied to record levels this year, partly because expectations of U.S. tariffs on refined metal pulled huge volumes into the American market, squeezing supply elsewhere. The rally has cooled in recent weeks as investors question how long the data-center building boom, a big source of copper demand, can last.
JBizNews Desk | Global
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