Chinese copper buyers are returning to the market after a prolonged absence, driving a sharp drawdown in Shanghai Futures Exchange inventories. SHFE warehouse stocks have fallen from a peak of 326,327 tonnes in March to just 98,899 tonnes by mid-May, according to CEIC data — a 70% reduction that signals a significant shift in the world's largest copper consuming nation.
The Yangshan copper premium, a closely watched indicator of spot import demand, has risen to $65 per tonne from a low of $20 in January. While still off the $89 level seen this time last year, the rebound indicates that Chinese buyers are now competing for imported units after months of sitting on domestic stockpiles. 'Chinese buyers are now back in the game,' Reuters reports.
The return of Chinese demand comes at a critical moment. With COMEX commanding a $500+ premium over LME, global metal is being pulled toward the US, potentially leaving Chinese buyers competing for a shrinking pool of LME-available material. LME stocks of ~385,000 tonnes had recovered earlier this year as China stepped back, but that buffer is now being tested from both sides.