1.Ending Nine Consecutive Declines, Copper Inventories in Major Regions Nationwide Increased by 6,000 mt This Week

December 26: As of Thursday, December 26, SMM national copper inventories in major regions increased by 6,000 mt from Monday to 105,400 mt, up by 6,700 mt WoW, ending nine consecutive weeks of decline with a slight rebound. Compared to Monday's inventory changes, most regions across the country saw an increase in inventory, except for Guangdong and Jiangsu, which experienced slight decreases. Total inventory was 39,000 mt higher YoY compared to 66,400 mt last year. Among them, Shanghai's inventory was 31,500 mt higher YoY, Jiangsu's was 11,600 mt higher, while Guangdong's was 5,200 mt lower. 》Click to Apply for Access to the Metal Industry Chain Database Specifically, Shanghai's inventory increased by 8,800 mt from Monday to 80,900 mt, mainly due to the continued inflow of imported copper. Jiangsu's inventory decreased by 1,900 mt to 15,200 mt, and Guangdong's inventory also decreased by 1,900 mt to 3,800 mt, primarily because both imported and domestic copper arrivals were relatively low, leading to the inventory decline in these two regions. Meanwhile, inventories in Chengdu-Chongqing and Tianjin regions increased, mainly due to weakened downstream consumption and increased arrivals from smelters. Looking ahead, our survey indicates that imported copper arrivals are expected to remain high next week. Additionally, as year-end approaches, smelters face pressure to clear inventories, which is expected to significantly increase arrivals next week. On the downstream consumption side, year-end requirements for end-users to control cash and inventory levels will likely lead to continued pullback in consumption. Therefore, we anticipate a scenario of increased supply and weakened demand next week, with weekly inventories expected to continue rising.

2.Premiums for Cargoes with Invoices Dated Next Month Plummet as Demand Continues to Weaken and Transactions Remain Poor

News, December 26:

Today, #1 copper cathode spot prices against the SHFE 2501 contract were quoted at a discount of 10 yuan/mt to a premium of 60 yuan/mt, with an average premium of 25 yuan/mt, down by 50 yuan/mt from the previous trading day. Standard-quality copper transaction prices ranged from 74,180 to 74,260 yuan/mt, while high-quality copper transaction prices ranged from 74,210 to 74,300 yuan/mt. The SHFE copper 2501 contract fluctuated rangebound at 74,200 yuan/mt during the early session and slightly jumped to 74,290 yuan/mt before the morning close. The price spread between the SHFE copper 2501 and 2502 contracts fluctuated from a contango of 30 yuan/mt to a backwardation of 10 yuan/mt.

After entering the trading of cargoes with invoices dated next month, market premiums dropped significantly, and trading activity was sluggish. At the beginning of the session, mainstream standard-quality copper with next-month invoices was quoted at a premium of 40-60 yuan/mt, while high-quality copper such as CCC-P and Jinchuan (plate) with next-month invoices was quoted at a premium of 70-80 yuan/mt. Due to the previously wide-open import arbitrage window, the cost of imported cargoes was relatively low, leading to high pricing flexibility in the market and a continuous decline in premiums. During the mainstream trading period, mainstream standard-quality copper with next-month invoices was quoted at parity to a premium of 20 yuan/mt, with some transactions completed, while high-quality copper with next-month invoices was quoted at a premium of 30-60 yuan/mt, with some transactions completed. Some enterprises, driven by settlement demands, quoted standard-quality copper with next-month invoices at a discount of 10 yuan/mt to parity before the end of the early session, with weak buyer demand.

The oversupply situation in the early market further expanded, spot demand remained weak, and premiums continued to decline rapidly, soon approaching discount levels. With year-end demand from enterprises remaining weak, premiums are expected to decline slightly again tomorrow.

3. Downstream Procurement Demand at Half, Overall Maintains Just-in-Time Procurement

Futures Market: LME copper was closed overnight. The most-traded SHFE copper 2502 contract opened at 74,180 yuan/mt overnight, initially hitting a high of 74,210 yuan/mt before fluctuating downward to an intraday low of 74,070 yuan/mt. It then fluctuated upward and consolidated sideways at the end, finally closing at 74,160 yuan/mt, up 0.14%. Trading volume reached 6,000 lots, and open interest stood at 139,000 lots.

【Copper Morning Meeting Notes】News: (1) The Bank of Korea stated that due to increased political uncertainty and other downside risks, it plans to further lower the benchmark interest rate in 2025. The Bank of Korea also pledged to implement market stabilization measures at an appropriate time if necessary. (2) The National Housing and Urban-Rural Development Work Conference was held in Beijing. The meeting outlined five key tasks for national housing and urban development in 2025, including persistently promoting the stabilization and recovery of the real estate market, fostering a new model for real estate development, vigorously implementing urban renewal, upgrading "China Construction," and building safe, comfortable, green, and smart housing. Among these, persistently promoting the stabilization and recovery of the real estate market was prioritized.

Spot Market: (1) Shanghai: On December 25, #1 copper cathode spot premiums against the front-month 2501 contract were quoted at 50-100 yuan/mt, with an average of 75 yuan/mt, down 10 yuan/mt MoM. Transactions yesterday were mainly for imported cargoes, with the trading center continuing to decline compared to the previous day. Downstream purchasing was also inactive, and both supply and demand in the market were weak, leading to lower premiums. As trading shifted to cargoes with invoices dated next month, the market is expected to become even quieter today.

(2) Guangdong: On December 25, #1 copper cathode spot premiums against the front-month contract were quoted at 240-300 yuan/mt, with an average of 270 yuan/mt, up 45 yuan/mt MoM. Overall, inventory hit a record low, and suppliers stood firm on quotes, pushing spot premiums higher. The overall trading atmosphere was slightly better than yesterday.

(3) Imported Copper: On December 25, warehouse warrant prices were $64-78/mt, QP January, with the average price flat MoM; B/L prices were $60-74/mt, QP January, with the average price flat MoM; EQ copper (CIF B/L) was quoted at $14-28/mt, QP January, with the average price flat MoM. Quotes referenced cargoes arriving in late December and early January. Due to the Christmas holiday closure of LME copper and the already limited supply, the US dollar-denominated copper market was relatively quiet today.

(4) Secondary Copper: On December 25, secondary copper raw material prices remained unchanged MoM, with Guangdong bare bright copper prices at 68,800-69,000 yuan/mt, unchanged from the previous trading day. The price difference between primary metal and scrap was 857 yuan/mt, up 160 yuan/mt MoM. The price spread between primary and secondary copper rods was 770 yuan/mt. According to the SMM survey, the price spread between primary and secondary copper rods slightly widened today, but sales of secondary copper rods were average. Many sales managers at secondary copper rod enterprises indicated that the consistently low price spread between primary and secondary rods led end-user wire and cable enterprises to maintain just-in-time procurement. Additionally, some end-users stated that they would stop placing new orders after the New Year holiday. Current raw material inventories are sufficient to meet production needs for orders on hand, resulting in lackluster trading for secondary copper rods today.

(5) Inventory: On December 25, LME copper cathode inventory increased by 0 mt to 272,725 mt; SHFE warehouse warrant inventory decreased by 856 mt to 14,659 mt.

Prices: Macro side, the PBOC conducted 192.3 billion yuan of 7-day reverse repo operations. Macro analyst Qing Wang stated that although the peak of local government bond issuance has passed, the PBOC may cut the RRR by 0.25-0.5 percentage points by year-end to support banks in increasing credit issuance, continue supporting government bond issuance, and sustain growth-stabilizing signals. Meanwhile, the policy signals released by the recent domestic fiscal work conference have boosted market sentiment, stabilizing copper prices. However, the US dollar index remained at high levels, which will exert some pressure on copper prices. Overall, copper prices lack further upward momentum. Fundamentals side, supply side, domestic copper cathode circulation was limited, with most transactions involving imported cargoes during the day. Demand side, downstream purchasing sentiment was average, with overall purchasing as needed. As trading shifted to cargoes with invoices dated next month, the market is expected to become even quieter. Copper prices are expected to fluctuate rangebound at current levels today.

4.Year-End RRR Cuts Possible by Central Bank; Copper Prices Edged Up Overnight 

December 26: LME copper was closed overnight. The most-traded SHFE copper 2502 contract opened at 74,180 yuan/mt overnight, initially hitting a high of 74,210 yuan/mt before fluctuating downward to an intraday low of 74,070 yuan/mt. It then fluctuated upward and consolidated sideways at the end of the session, finally closing at 74,160 yuan/mt, up 0.14%. Trading volume reached 6,000 lots, and open interest stood at 139,000 lots. Macro side, the PBOC conducted 192.3 billion yuan of 7-day reverse repo operations. Macro analyst Qing Wang stated that although the peak of local bond issuance has passed, the PBOC may implement an RRR cut of 0.25 to 0.5 percentage points by the end of the year to support banks in increasing credit issuance, continue backing government bond issuance, and sustain signals of stabilizing growth. Meanwhile, policy signals from the recent domestic fiscal work conference have boosted market sentiment, halting the decline in copper prices. However, the US dollar index remained at high levels, which will exert some pressure on copper prices, leaving them lacking further upward momentum. Fundamentals side, supply side, the circulation of domestically produced copper cathode was limited, with most transactions during the day involving imported cargoes. Demand side, downstream purchasing sentiment was moderate, with overall purchasing as needed. As trading transitioned to cargoes with invoices dated next month, the market is expected to become even quieter. Copper prices are expected to fluctuate rangebound at current levels today.

5. Copper Prices Shift Lower, While Spot Premiums/Discounts in Shandong Continue to Decline

 With only one week left in 2025, copper prices this week saw a slight downward shift in their center compared to last week. However, spot premiums in Shandong continued to decline. What is the specific supply and demand situation in the market?

       In terms of supply, both Hengbang and JCC Guoxing resumed normal production in December after maintenance, and all smelters in Shandong restored regular copper cathode supply. As a result, the spot market experienced a supply surplus in December. Additionally, major smelters faced year-end inventory clearance tasks. Facing weak market demand, they opted to sell at lower prices to generate cash, even as copper prices shifted downward.

       From the consumption side, although the center of copper prices moved slightly lower WoW this week, it remained above 74,000 yuan/mt, which is not considered a low-price range by downstream buyers. Coupled with year-end accounting needs of end-user enterprises, downstream procurement demand remained weak except for some just-in-time procurement. According , orders from downstream copper processing enterprises were lukewarm, and they were also unwilling to stockpile large inventories, leading to weak demand for copper cathode procurement.

       Overall, year-end demand for copper cathode procurement remained weak. Smelters actively reduced premiums to boost sales and lower inventory levels. However, downstream enterprises did not increase procurement volumes despite the decline in premiums, maintaining just-in-time procurement. Although smelter inventory levels decreased, they did not meet expectations. Therefore, even with a slight downward shift in copper prices, spot premiums in Shandong continued to decline at year-end. SMM expects the supply surplus to intensify in the near term, but as January begins, smelters will face less inventory clearance pressure, and spot premiums are unlikely to continue falling significantly.