Chinese Spot Trading Comes to a Standstill as Copper Prices Reach Record High

Chinese Copper Spot Market Sees Dwindling Demand at Record Prices

The copper market in China has hit a standstill as buyers are shying away from making purchases at the current elevated price levels, sources have revealed to Fastmarkets. With copper prices reaching all-time highs on various exchanges, including Comex, LME, and SHFE, Chinese consumers are feeling the heat of the surge.

In a country where copper is a crucial commodity, the lack of demand is particularly felt by domestic copper fabricators who are struggling with a dearth of new orders. As one source lamented, the disconnect between copper futures prices and real demand is taking a toll on industry players, from fabricators to end users.

Spot buying has essentially frozen, with the majority of buyers staying out of the market until prices stabilize. This has been reflected in the record-low Shanghai grade A copper cathode premiums, indicating a significant drop in Chinese demand for imported copper.

Moreover, the continued buildup of copper stocks at SHFE-registered warehouses further underscores the sluggish demand in China’s domestic market. While Chinese copper smelters are looking to export their units to LME-registered warehouses in Asia, slow arrivals and logistical challenges are hindering the process.

The industry is clearly at risk as Chinese smelters struggle with rising costs for copper concentrate and declining prices for refined copper. The situation has put pressure on cash liquidity for fabricators, especially smaller ones who are already halting spot market purchases due to cash constraints.

As the industry grapples with speculative trading and a lack of real demand, participants are calling for a return to market fundamentals to ensure the sustainability of the copper market in China.