Copper holds near highs on tight China supply

Three-month copper on the London Metal Exchange fell 0.31% to $14,432.50 a metric ton on October 29, 2026, holding close to a two-week high of $14,517 set the previous day. The London benchmark remained elevated despite the latest pullback.

On the Shanghai Futures Exchange, the most-traded copper contract slipped 0.25% to 109,560 yuan a ton. Overnight, a related SHFE December contract closed at 109,240 yuan a ton, up 0.04%, while LME copper settled at $14,491 a ton, up 0.20%, showing that recent gains have largely been consolidated rather than reversed.

Price advances have been constrained by expectations of further U.S. interest rate hikes, which remain a potential headwind for the metal. Nonetheless, strong physical market signals from China have supported prices near recent highs.

Physical copper supply in China remains tight, reflected in rising spot premiums across key regions. The Yangshan copper premium, a gauge of Chinese appetite for imported metal, surged to $205 a ton as of Wednesday, marking its highest level in more than a decade.

Domestic spot premiums also climbed. In Shanghai, #1 copper cathode prices against the SHFE 2611 contract were quoted at a premium of 920–1,250 yuan a ton, with an average premium of 1,085 yuan a ton. In Guangdong, #1 copper cathode against the front-month contract was quoted at premiums of 1,100–1,300 yuan a ton, averaging 1,200 yuan a ton, with SX-EW copper at an average premium of 1,040 yuan a ton.

Imported copper premia strengthened alongside domestic premia, with average warrant prices around $205 a ton and bill-of-lading prices near 195 yuan a ton for cargoes due to arrive from late October to early December. Suppliers in the spot market showed a strong willingness to hold prices firm and were reluctant to sell at low levels as available cargoes became scarce.

Stocks monitored by the Shanghai Futures Exchange fell more than 26% last week after two weeks of inflows, underscoring the tightening supply picture. Across major Chinese regions, social copper inventories declined by about 20,000 tons from last Monday to just over 80,000 tons as of October 26, down more than 100,000 tons from over 180,000 tons in the same period a year earlier.

Guangdong inventory fell below 10,000 tons, reinforcing a low-inventory pattern and contributing to the description of a “hard-to-find cargo” situation in that market.

At the same time, rising futures prices and higher spot premiums have increased procurement costs for downstream processors, curbing buying interest. Market activity has turned sluggish, with downstream consumers favoring just-in-time purchases and showing weaker overall procurement sentiment despite the tightness in supply.

The copper market developments are occurring alongside notable moves in China’s currency. China’s yuan reached a four-year high against the dollar and against a trade-weighted basket after the Federal Reserve kept interest rates unchanged at its latest meeting.

Before market open on October 29, the People’s Bank of China set the daily midpoint at 6.7147 per dollar, its strongest since February 2, 2023. In spot trading, the onshore yuan strengthened to as high as 6.6620 per dollar, the strongest level since June 7, 2022, while the offshore yuan traded around 6.6601 per dollar.

Based on Thursday’s midpoint, the yuan’s CFETS trade-weighted index rose to 103.75, the highest since July 15, 2022. While U.S. rates were left unchanged at this meeting, expectations of possible future increases continue to influence broader financial conditions, including sentiment toward industrial metals such as copper.