Shanghai copper spot premiums hit record high

The strain begins with inventories. SMM-tracked copper cathode stocks across major Chinese markets fell to about 62,600 tonnes as of Nov. 5, down from 134,400 tonnes a year earlier. Stocks in Shanghai and Jiangsu were particularly thin, while SHFE warehouse warrants slipped to 4,327 tonnes. With little metal on hand to absorb disruptions, sellers have been able to keep offers firm even as outright prices fell.

The squeeze has been aggravated by a shift in global trade flows. Earlier expectations of US tariffs on refined copper drew cargoes toward the United States, helping lift COMEX above LME and diverting material away from Asia. More than 70% of LME copper stocks were still sitting in US warehouses as of Nov. 5, and even though the COMEX-LME spread has narrowed, the copper already parked there will take time to return to Asia. China’s copper cathode imports for January-September were down 16.34% year on year at 2.14 million tonnes, underscoring the supply gap.

The immediate impact is on Chinese manufacturers. Spot copper was trading roughly 4,500–4,900 yuan a tonne above the December SHFE contract once backwardation is added in, lifting replenishment costs for fabricators that buy against deferred futures but need prompt physical delivery. Some downstream users have already idled furnaces or suspended lines, limiting procurement to immediate needs. In a market this tight, even small delays in port unloading or customs clearance can move prices.

Relief is possible, but likely limited before the nearby contract expires. Positive import margins against the November contract are encouraging customs clearance of cathode already in bonded warehouses or due shortly, and some imported material is expected to arrive over the weekend. Still, vessel traffic controls linked to the China International Import Expo are expected to remain in place through Nov. 10, delaying unloading and the release of cargoes into the spot market.

The broader message for investors is that copper’s physical market remains firm even as macro sentiment around future demand has cooled. Technology stocks have sold off on reassessment of AI spending and data-centre buildout, pressuring long-dated copper demand expectations and weighing on futures. But in the near term, the market is being driven less by long-run electrification themes than by a shortage of deliverable cathode in China.

That leaves a narrow path for easing premiums: more imported metal clearing customs, a pickup in warehouse warrant cancellations, or a reduction in the November-December delivery squeeze after SHFE rolls to the next contract. Until then, Shanghai spot premiums are likely to remain elevated and volatile, with refiners, traders and downstream buyers competing for a shrinking pool of prompt copper.