Why Copper Prices Are Falling Despite China Paying a Record Premium

Chinese buyers are paying a record premium of over $200 a ton to import copper. The benchmark price in London, however, slid to a one-week low on Friday.

Bloomberg tied Friday’s drop to a tech selloff and oil at its highest since April. The physical market, however, keeps tightening as copper piles up in the US.

China Pays Up as Its Copper Stocks Run Thin

The Yangshan premium tracks the extra cost Chinese importers pay over London Metal Exchange (LME) prices.The Kobeissi Letter reported it spiked past $200, the highest in Fastmarkets data going back to 2017. 

The post linked the jump to strong Chinese demand and inventories below typical seasonal levels. Several data points show how tight supply has become.

• The premium has more than doubled in 3 months, according to The Kobeissi Letter. It is also up 700% since the start of 2026.
• China’s copper inventories have fallen over 25% to 54,356 tonnes, Bull Theory said in an X post.
• Chinese smelters are trimming output due to higher costs. Bloomberg reported refined copper output fell 1.1% year-on-year in the third quarter.
• Extra supply from Africa could take 1 to 2 months to reach China, according to Bull Theory.

Global copper inventories still exceed 1.2 million tons, Bull Theory noted. However, The Kobeissi Letter said much of that stock is concentrated in the US. 

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What Is Dragging Copper Futures Lower?

Futures prices, meanwhile, have moved in the opposite direction. 3-month copper futures fell 1.4% on Friday to settle at $14,154.50 a ton on the LME. That leaves the copper price below its September record of $14,875.

Miners fell harder. Southern Copper dropped 7.42%, and Freeport-McMoRan lost 5.55% on October 30.

Guangzhou Futures Co. blamed doubts over artificial intelligence (AI) spending.

“The sharp decline in technology stocks has fueled market skepticism regarding returns on AI investments, leading to a retreat in risk appetite and putting downward pressure on copper.” Guangzhou Futures Co. stated.

Spot copper traded over $170 a ton above three-month futures on Friday, Bloomberg reported. Kobeissi put that LME gap at $217, the widest since mid-August.

The Kobeissi Letter said expected US tariffs on refined copper diverted hundreds of thousands of tons to the US.

“The physical copper supply squeeze is far from over,” the analysts wrote.

The White House has yet to rule on a proposed 15% tariff on refined copper from January 2027. Shanghai Metals Market (SMM) said US stockpiles will stay put until the White House clearly backs away from the tariff.

SMM also sees tight supply persisting in the short term. However, it said an unfavorable Shanghai-to-London price ratio will slow further gains in import premiums.

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