Why Copper Prices Are Falling Despite China Paying a Record Premium

Chinese importers were paying a record Yangshan premium of more than $200 a tonne for copper, the highest in Fastmarkets data since 2017, even as three-month copper futures on the London Metal Exchange (LME) fell 1.4% on Friday to settle at $14,154.50 a tonne, below September's $14,875 record. The Yangshan premium measures the extra cost Chinese buyers pay over LME prices. China's copper inventories fell more than 25% to 54,356 tonnes, and smelters were cutting output because of higher costs; refined output fell 1.1% year on year in the third quarter. Guangzhou Futures attributed the futures decline to tech-stock weakness and doubts over artificial intelligence (AI) spending, while expected US tariffs on refined copper diverted supply to the US.