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Surge in Chinese copper exports expected as prices soar

In a bid to dampen soaring copper prices and alleviate pressure on their order books, Chinese copper producers are gearing up to export up to 100,000 metric tons of metal, the highest volume in 12 years. The move comes as copper prices surged towards record highs due to a speculative frenzy, with prices on the London Metal Exchange (LME) nearing peaks not seen since 2022.

Industry sources revealed that the planned exports aim to capitalize on the rally, which has seen copper prices reach levels close to the all-time high of $10,845 per metric ton. The anticipated 100,000 tons of copper shipments from China, slated to occur over the next few weeks, would mark a significant uptick compared to recent export volumes.

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While logistical challenges may arise from shipping such large quantities of copper out of China in a short timeframe, industry insiders suggest that much of the metal will likely pass through bonded warehouses in Shanghai. These warehouses have seen a notable increase in inventories, indicating a buildup of surplus metal.

The decision to export copper reflects China’s efforts to influence prices and address the slowdown in demand from end-users. However, it represents only a fraction of China’s annual consumption of approximately 13 million tons, highlighting the country’s status as a significant importer.

Despite record-high prices on the LME, the physical market in China shows signs of excess supply, with rising inventories and subdued demand. The global copper market is also expected to face surpluses in the coming years, according to forecasts from the International Copper Study Group (ICSG).

The widening arbitrage between LME and Shanghai Futures Exchange (ShFE) prices is driving the export decision, making it financially attractive for Chinese producers. Logistics experts report increased inquiries about the costs of transporting copper to LME warehouses, indicating growing interest in export opportunities.

With Chinese copper producers poised to potentially export significant volumes each month, the move could provide some relief to the global copper market, which has been grappling with supply-demand imbalances and price volatility.

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