China’s Copper Stockpiles Set for Record Drop as Trade War Sparks Supply Crunch

Shanghai copper inventories are poised for another sharp decline this week, traders say, exacerbating a supply squeeze that has already driven stockpiles down 60% in April—the steepest monthly drop on record. The shortage is fueling a price surge and deepening backwardation, with traders scrambling to redirect global supplies to China.

Key Developments:

• Inventory Collapse: SHFE copper stocks fell to 89,307 metric tons in April (lowest since records began), with further declines expected this week.
• Price Surge & Backwardation: The June contract (SCFM5) now trades 2.1% above October (SCFV5), up from 0.75% in March, signaling extreme near-term tightness.
• Import Rush: The Yangshan premium (import demand gauge) hit $100/ton, a 5-month high, as traders eye higher Chinese prices versus global markets.
• Trade War Fallout: Trump’s tariffs diverted scrap copper from China to the U.S., where COMEX stocks surged 61% since March to 156,623 tons (highest since 2018).

Market Impact:

• Chinese Buyers: Struggling to secure copper amid manufacturing demand and disrupted scrap flows.
• Global Arbitrage: Rising SHFE prices may lure LME stocks to China, tightening supply elsewhere.