Trafigura Snaps Up Copper in Asia as China Faces Supply Crunch
Trafigura Group has been buying large volumes of copper to boost sales into Asia as local supplies run low, adding to a scramble for metal that’s pushed regional premiums for spot cargoes to record highs.
The Singapore-based company is one of the biggest traders in the copper market, and over the past two weeks it has approached several producers and traders in Asia requesting to buy large volumes over November and December, according to people familiar with the matter, who asked not to be identified because the discussions were private.
The buying spree has come during a deepening supply crunch in China, where smelters are facing severe constraints on flows of mined ores and scrap. While demand is relatively subdued, buyers have been thrust into a bidding war to secure alternative spot cargoes to make up for shortfalls from domestic suppliers.
Trafigura in particular has been willing to outbid rivals, contributing to a sharp rally in premiums for spot metal across Asia in recent weeks, some of the people said. A spokesperson for Trafigura declined to comment.
Historically, buying activity in China — which consumes nearly 60% of the world’s copper — has provided crucial support for prices during major corrections. Copper has come under pressure this week during the global selloff in stock markets, but there are growing expectations that Chinese manufacturers will step in to buy the dip, potentially intensifying the squeeze on domestic supply.
The premiums that Chinese buyers pay on top of futures to secure spot cargoes are closely watched as a gauge of supply and demand. In Shanghai, spot premiums have tripled over the past two weeks to hit a record of 2,615 yuan a ton, according to local pricing agency Shanghai Metals Market.
Premiums for imported copper tracked by Fastmarkets Ltd. have also soared more than 40% to $195-210 a ton, the highest level in data going back to 2017, while premiums across Southeast Asia have also surged.
The supply crunch is also evident in futures markets, where December-delivery contracts on the Shanghai Futures Exchange have surged above January prices, in a condition known as backwardation that’s a hallmark of a tightening spot market. The front-month spread surged to more than 1,200 yuan a ton in late trading on Friday, hitting the highest level since 2005.
The backdrop to the squeeze is that refined copper inventory has fallen sharply in China throughout this year. International miners and traders have been prioritizing shipments to the US over the past two years, and buyers in China have been drawing down inventories to compensate for shortfalls in imports.
Deliverable stocks in SHFE warehouses now stand at 33,848 tons, nearing a multiyear low struck in 2022, data showed on Friday. That would cover China’s overall copper usage for less than a day.
Some traders are becoming wary of the combination of strong premiums, low inventories and tight price spreads, anticipating that market conditions could go into reverse if supply does improve. But in the short term, there’s little sign of relief.
China’s smelting output has slowed due to constraints on the availability of feedstock including mined concentrates and scrap. Disruptions to exports from Democratic Republic of Congo — China’s biggest source of refined copper — also threaten to crimp supplies in the domestic market.
The DRC government recently seized over 500 trucks and several thousand tons of copper and cobalt during a crackdown on illegal mining. Several Chinese-African copper plants were raided in October.
“One of the main drivers for the tightness is the slowdown in refined production growth, which reflects the fact that smelters have been struggling for feedstock,” said Amy Gower, a metals strategist at Morgan Stanley. “The demand indicators are fairly lackluster, so it does point to supply issues being the cause of the tightness in the Chinese market.”
One wildcard possibility is that the surge in Chinese premiums could encourage traders to source metal from the US, where vast stockpiles of copper have accumulated due to the possibility that President Donald Trump will impose import tariffs on the metal.
On paper, the surge in SHFE futures and spot premiums is sufficiently large to cover the cost of shipping copper from the US to China, according to people familiar with the economics of the trade. The hindrance to doing so — they said — is that they could make much more selling those cargoes in the US if tariffs are introduced.
The question of whether Trump will push ahead the levies came into sharp focus in the run-up to the midterms, with analysts and traders anticipating that imports to the US will slow if tariffs fail to materialize. That prospect is already weighing on prices, but until the squeeze in China few were anticipating that large volumes of US copper might be exported back out into international markets.
“This is starting to become more of a question, but for it to happen I think you’d need tariffs to be definitively ruled out,” said Morgan Stanley’s Gower. “Our base case is that the US material will be quite sticky and will only get drawn down through under-importing.”
©2026 Bloomberg L.P.
This article was generated from an automated news agency feed without modifications to text.
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