Copper premiums hit records in Asia as Trafigura hunts metal

Trafigura has spent two weeks approaching producers and traders in Asia to buy large copper volumes for November and December delivery, according to people familiar with the discussions. The Singapore-based trader declined to comment¹.

The buying has coincided with a record jump in the premium Chinese buyers pay for spot metal. The Shanghai spot premium over futures reached 2,615 yuan a tonne on 6 November, triple its level two weeks earlier, according to Shanghai Metals Market data reported by Bloomberg¹. China consumes nearly 60% of the world's copper¹.

Premiums and spreads at multiyear highs

The move has been fast. Shanghai's spot premium stood at 2,100 yuan a tonne on 5 November, the highest since 2021, before the next session's record³. Import premiums tracked by Fastmarkets rose more than 40% to $195 to $210 a tonne, the highest in data going back to 2017, and premiums across Southeast Asia also rose¹. The Yangshan premium for imported copper reached a record $210 a tonne³. Kpler put the Yangshan premium at a record $205 this week².

Futures show the same stress. The front-month spread on the Shanghai Futures Exchange widened beyond 1,200 yuan a tonne in late trading on 6 November, the highest since 2005¹. December contracts traded above January prices, a condition known as backwardation, which means buyers pay more for metal delivered soon than for later delivery¹.

Visible stock is thin. Deliverable stocks in SHFE warehouses were 33,848 tonnes on 6 November, close to a multiyear low set in 2022¹. That is less than a day of Chinese use¹. Kpler put SHFE stocks at 54kt (thousand tonnes), down from 433kt in March and half the level of a year earlier². The two figures come from different providers and are not directly comparable, but both point to low stocks.

On the London Metal Exchange, cash copper settled at $13,955 a tonne on 6 November. Three-month metal settled at $13,780⁴. LME stocks rose to 316,675 tonnes from 274,000 tonnes on 30 October⁴. Copper averaged $14,473 a tonne in September, up 44.8% from a year earlier⁵.

Supply, not demand

Smelters cannot get enough feedstock. Seaborne imports of copper concentrate fell 11% year to date, and restrictions are limiting scrap supply². China's smelting output has slowed for the same reason¹.

"One of the main drivers for the tightness is the slowdown in refined production growth," said Amy Gower, a metals strategist at Morgan Stanley. She said that slowdown reflects smelters struggling to secure feedstock¹. Demand indicators are "fairly lackluster", she said, which points to supply as the cause of the tightness in China¹.

Africa has become the bigger problem. The government of the Democratic Republic of Congo recently seized more than 500 trucks. It also took several thousand tonnes of copper and cobalt in a crackdown on illegal mining, and several Chinese-African copper plants were raided in October¹.

The DRC supplied 41% of China's cathode imports in 2025, but its shipments to China fell 30% year on year in the third quarter to 266kt. August was the low point at 69kt, against a monthly average of 110kt in the year before².

Chilean metal has also been diverted. Chinese imports of Chilean cathode fell from 48kt a month in 2024 to about 15kt since the arbitrage to the US opened last year².

Demand is not driving the rally. Mysteel said the premium surge reflects a shortage of available metal rather than demand growth, with buying mainly from large cable manufacturers topping up thin inventories³. "Fabricators are buying hand to mouth," said Zhou Xiaoou, an analyst at Zijin Tianfeng Futures³.

The reverse flow that is open on paper

The US has absorbed the marginal tonne for two years. Breakbulk cathode imports were on track to exceed 230kt in October, a monthly record. That is above the previous record of 198kt in July, and Kpler estimates more than 800kt landed in four months². The arbitrage between LME and COMEX prices that paid for those shipments averaged $500 a tonne between May and early August, and has since closed².

Kpler expects breakbulk deliveries to fall to 100kt in November, still above the roughly 80kt the US needs each month to balance domestic supply and demand². The country holds most of the world's visible copper. Exchange-registered stock outside the US is 155kt, while stateside inventories exceed 897kt².

Kpler estimates total inventory on US shores will reach 2 million tons once the full weight of October deliveries is counted². If a tariff locked that stock in, it would cover US import needs for about two years, Kpler said².

That stock is the prize for everyone else. People familiar with the economics of the trade said the rise in SHFE futures and spot premiums is big enough to pay for freight from the US to China¹. What stops it is the tariff bet: traders could make much more selling those cargoes in the US if tariffs are introduced¹.

Gower expects the metal to stay. "Our base case is that the US material will be quite sticky and will only get drawn down through under-importing," she said. A reversal would need tariffs to be definitively ruled out, she added¹. Kpler makes a similar point. With no tariff, nothing isolates US stocks from the global market, but a reversal would first draw cathode into LME warehouses in the US. Re-exports would then need overseas prices, including local premiums, to exceed the US price by enough to cover freight and financing².

What to watch

First, the Section 232 verdict. The investigation into a potential copper tariff was launched by the White House in February 2025 and has not concluded². A tariff confirmed with a long-dated implementation could widen the arbitrage again and pull more metal to the US. The window would need to be several months long to trigger another rush².

Second, Chinese buying into year-end. Fourth-quarter arrivals in China averaged 326kt a month over the past five years. That is 40kt above the rest of the year, so any easing in competition for marginal tonnes would help consumers there². Any recovery in demand would instead meet thin stock¹.

Third, the risk of a sudden reversal in premiums. Some traders are wary of the combination of strong premiums, low inventories and tight spreads, and expect conditions to reverse if supply improves, though they see little relief in the short term¹. Rising LME stocks, from 274,000 tonnes on 30 October to 316,675 tonnes on 6 November, are one signal to track⁴.