Shanghai copper futures outpaced London on June 26, with the most-active SHFE contract closing at ¥106,510/mt — a 2.1% daily gain that pushed the contract to its highest in a week. The move came after China’s State Council indicated plans to accelerate bond issuance and infrastructure approvals in Q3.
The SHFE-LME arbitrage window has widened, incentivizing imports into China. LME copper at $13,287/mt translates to roughly ¥96,500/mt at current exchange rates, leaving a ¥10,000/mt premium for SHFE metal. This spread should draw warehouse stocks into China over the coming weeks, which would support LME prices but could cap further SHFE gains.
China’s copper demand remains concentrated in the power grid and EV sectors. Grid investment was up 12% year-on-year through May, according to NEA data. EV production hit 1.07 million units in May, sustaining heavy copper wiring demand. Property completions — a smaller but still meaningful copper consumer — remained flat, no longer a drag.
The contrasting trends are notable: LME copper is down 1.87% over 30 days, while SHFE is up 1.94%. This divergence reflects the China-versus-rest-of-world demand narrative that has shaped the copper market all year. Western recession fears have capped LME gains, while Chinese policy support has propped up Shanghai.
Buyers sourcing copper for Asian operations should note the SHFE premium and consider whether to shift procurement toward LME-linked contracts while the arb window is open. For Q3, Chinese demand looks well-supported by stimulus, but the spread is at levels that historically attract imports, which could narrow the gap. Hedge SHFE exposure if you have fixed-price Chinese supplier contracts.