China's spot copper premium has reached its highest level since 2008, is it a return to the era of rapid growth in copper demand? The answer is no.

Ge Xianlin, a non-ferrous metal researcher at the Intermediate Research Institute, told the Wisdom Astack News Agency: "The spot premium of copper in China has reached its highest level since the 2008 financial crisis, with a maximum premium of 1300 yuan/ton (on April 25th). This high value indicates that the spot market for copper is very tight

In recent years, it has been relatively rare for domestic spot copper to have a premium of over 1000 yuan per ton. The spot market is so tight, but it is not only because market demand has rebounded, but also because there are other drivers. The head of the research department of a futures company in Beijing told The First Financial Times:

The recent continuous depreciation of the Chinese yuan has led to high international copper costs, and currently imports are at a loss of 4000 yuan/ton, suppressing the import motivation of traders. At the same time, copper smelters brought copper into the bonded area to prepare for export, but the State Reserve Bureau intercepted this copper in the bonded area, resulting in a significant increase in domestic copper prices.

According to Wall Street News website, citing Reuters, the State Reserve Bureau collected at least 200000 tons of imported copper from bonded zone warehouses in March and April. This year, the State Reserve Bureau has collected and stored a total of 500000 tons of copper.

Information from Shanghai Nonferrous Metals Network also shows that the market quotation was once chaotic... Downstream investors have a clear fear of high prices, and their performance is tangled, with transactions mainly being speculative by intermediaries.

Securities Times reported that Cheng Xiaoyong, an analyst at Baocheng Futures, believes that this artificial spot premium is difficult to sustain:

From a statistical perspective, it is rare for copper spot prices to experience significant increases in premiums, and the duration of premiums above 500 yuan does not exceed a week;

The shortage of domestic copper spot supply is only temporary, and most copper is temporarily locked in bonded zone warehouses. As long as the copper price is repaired and import losses are reduced, this part of copper will be quickly released;

Once domestic copper spot prices remain high, not only will China's bonded zone copper declare for import, but overseas copper imports will also significantly increase.

Although it has now entered the peak consumption season for copper demand in major areas such as electricity, home appliances, and automobiles in April and May. Shanghai Nonferrous Metals Network also shows that the current order situation of wire and cable enterprises is gradually improving, the operating rate of copper tube enterprises is significantly increasing, and the use of copper by automobile production enterprises is also increasing. However, in the long run, the growth space of copper demand in China may still be limited, and this year, the peak of rapid growth in copper consumption is difficult to reproduce.

China's average annual copper consumption accounts for 40% of the global total, and the slowdown in China's economic growth has raised concerns among investors about the country's copper consumption prospects.

The Chinese government has set a GDP growth target of 7.5% for this year. However, the GDP growth rate in the first quarter fell to 7.4%, the lowest level in 20 quarters.

The monthly economic indicators were also unsatisfactory. In the first quarter, the industrial added value grew by only 8.8% year on year, and the growth rate of fixed assets investment was 17.6%. HSBC China's manufacturing PMI in April remained below the boom and bust line for four consecutive months, with a decline in the new orders index, indicating weak demand in China's manufacturing industry.

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