Highlights

  • Yangshan's copper premium hit a record $230 a tonne on 9 November while COMEX copper hovered near $6.23 a pound.
  • Shanghai Futures Exchange stocks fell to 33,848 tonnes, a three-year low, as smelter cuts and tariff-driven shipments tightened supply.
  • CME's premium over the LME has shrunk from above $700 a tonne in August to about $80.
  • Freeport-McMoRan is ramping up Grasberg Block Cave towards 80% of capacity by mid-2027 after last year's fatal mud flow.

Chinese buyers are paying more than ever for physical copper just as exchange prices drift lower. The Yangshan Import premium reached a record $230 a tonne on 9 November, while COMEX copper was quoted at about $6.23 a pound on Wednesday, after slipping to a four-month low near $6.20 earlier in the week. In London, LME copper closed the overnight session at $13,794.50 a tonne, up 0.6%. For Freeport-McMoRan (NYSE:FCX) and Antofagasta (LSE:ANTO), the gap between paper and physical prices is the story to follow.

A Tight Physical Market, Softer Futures

The CIF China cathode import premium was assessed at $220 a tonne over LME cash on 6 November, the highest since the assessment began in August 2014. Shanghai spot premiums hit a record 2,615 yuan a tonne, and stocks in Shanghai Futures Exchange warehouses fell to 33,848 tonnes, a three-year low.

Reported explanations include lower refined copper shipments into China this year, smelter output cuts driven by higher ore costs and thinner margins, large volumes of metal moved to the US ahead of possible tariffs, and maintenance at Chinese and Japanese smelters. These are reported explanations, not a complete account. There are early signs the squeeze may be easing: some suppliers have become more willing to sell, delayed import cargoes are restocking the market, and Shanghai's average spot premium fell by 725 yuan to 975 yuan a tonne on 11 November.

The Tariff Question

The gap between New York and London has narrowed sharply. CME's spot premium over the LME has shrunk from above $700 a tonne in August to about $80, and COMEX November copper traded about $85 below LME cash on 4 November. CME warehouses hold 732,949 tonnes, about 85% of global exchange stocks, while the White House has neither imposed nor withdrawn its proposed copper tariff.

Tariff expectations weakened after the Democratic sweep in the US midterm elections. If a tariff were ruled out, some US stocks could eventually move to other markets, though any redistribution is expected to be gradual, and one bank considers re-exports unlikely until tariffs are definitively ruled out.

AI Demand Versus Rate Bets

Sentiment has tracked artificial intelligence spending, with strong results from AI infrastructure companies reviving interest in copper's role in data centres and power networks. Rates are the counterweight: expectations of Fed increases have limited gains, while high prices and wide spreads between contracts discourage Downstream buying. Money managers' net long position on CME fell from 82,649 contracts in mid-September to 34,444, and COMEX copper's record settlement of $6.89 came on 9 September.

Company Exposures

Freeport-McMoRan operates in the US and Indonesia. Its US sales benefit when COMEX trades at a premium, so a narrower spread trims that advantage. Gold output adds diversification, but a lower copper price would compress margins if costs stay fixed.

Antofagasta mines in Chile and sells mainly on LME-linked terms. A strike at its Centinela mine ended in October after a deal with unions.

Rio Tinto approved $144 million to advance Arizona's Resolution Copper project, contributing $79 million for its 55% stake, with BHP holding the other 45%. BHP's supervisors at Escondida ratified a labour agreement in October. Sandfire Resources, with operations including Matsa in Spain and Motheo in Botswana, is more concentrated in copper concentrate, and its Revenue also depends on treatment charges.

What Could Shift the Price

Prices could find support if Chinese restocking continues, smelter cuts persist or new mine disruptions emerge; a firm US tariff decision could also reopen the COMEX premium. A faster release of US inventories, a stronger dollar, Fed rises or weaker downstream buying could weigh on prices, and easing Shanghai premiums would suggest the squeeze is fading.

Watch Shanghai Futures Exchange stock reports, daily LME and CME Warehouse data, Friday's CFTC positioning report, China's customs data and production updates from Freeport and Antofagasta.