China copper premium hits record as market weighs US stock shift

Concerns over the potential redistribution of large copper stocks accumulated in the US are rising among China-based market participants, with any return of metal to the international market potentially reshaping global trade flows as China's copper import premium hits a record high amid tightening domestic availability.

The market is facing competing pressures, with expectations that easing US tariff risks could release more metal into the international market and pressure futures prices, while physical tightness in China continues to support spot premiums and demand for imported cathode.

China's copper cathode import premium rose to an all-time high Nov. 6 as falling exchange inventories, reduced domestic smelter output and limited spot availability prompted consumers to turn to imported metal.

Platts, part of S&P Global Energy, assessed the Chinese copper import premium at $220/metric ton over the London Metal Exchange cash price, CIF China, on Nov. 6 for LME-registered normal brands of electrolytically refined cathode, up $100/mt, or 83.3%, from a month earlier.

This was the highest level since Platts launched the assessment in August 2014.

Import premiums are widely viewed as an indicator of China's appetite for overseas copper, with higher premiums typically signaling greater willingness among Chinese buyers to secure imported cathode.

The record premium comes as market participants reassess international copper flows following the US midterm elections, with China-based market participants increasingly expecting a potential delay or moderation in US tariffs on refined copper imports in 2027.

China-based participants said softer US trade measures could weaken the pull that has drawn large volumes of refined copper toward the US over the past year, potentially leaving more metal available for other markets, including China.

COMEX-LME spread narrows

The price incentive to move copper into the US has already weakened considerably.

The spread between COMEX and LME copper prices narrowed to about minus $85/mt as of Nov. 4, compared with a COMEX premium of about $89/mt a month earlier, based on the COMEX November 2026 contract and LME cash settlement prices.

A sustained reversal in arbitrage could eventually encourage some of the inventories accumulated in the US to be redirected to non-US markets, several China-based analysts said.

However, any redistribution of US copper inventories would likely be gradual.

"Inventory flows won't reverse overnight," a China-based analyst said. "The price spread is key, while logistics and domestic US demand will create friction."

Copper prices came under pressure recently as the market reassessed US tariff expectations following the midterm election results, according to China-based market sources.

Despite softer futures prices, physical conditions in China remained exceptionally tight, highlighting the divergence between futures market sentiment and spot market fundamentals.

China physical market tightens

Spot cathode availability in China was heard to be limited amid maintenance at domestic smelters, while maintenance at some Japanese smelters also constrained supplies available to the wider Asian market, according to sources.

Domestic Chinese spot premiums were heard at about 1,900 yuan/mt ($285/mt) as of Nov. 5, according to a China-based producer, reflecting tight prompt availability.

Copper stocks at Shanghai Futures Exchange warehouses fell to 44,612 mt as of Oct. 30, down 17.9% week over week, further highlighting tightening physical availability.