Global Copper Surplus, Yet China Is Paying Up: Record Yangshan Premium Shows the Metal Moved
On October 28, the Yangshan copper import premium rose to 205 dollars per tonne, an all-time record and 17 dollars higher than the previous day. Spot premiums in northern China jumped 160 yuan to 690 yuan per tonne in a single day as holders withheld cargo. The Yangshan premium measures what buyers will pay extra to secure bonded copper promptly; a record reading means China's spot market is not short on expectations, it is short on metal that can be lifted today.
The puzzle is that global paper data show no shortage. The International Copper Study Group now forecasts a 104,000 tonne refined copper surplus for 2026, widening to 368,000 tonnes in 2027. Global exchange inventories exceed 1.2 million tonnes, roughly double a year ago. But nearly all of it sits in the United States: COMEX-approved warehouses hold about 714,000 tonnes, some 70 percent of visible global stocks, up roughly 750 percent since February 2025, while Shanghai Futures Exchange stocks stand at just 54,400 tonnes, down more than a quarter last week.
Why is the copper stuck in America? The root cause is the Section 232 investigation launched in February 2025. Fearing tariffs on refined copper, US imports surged about 80 percent to 1.62 million tonnes for the year; the August 2025 proclamation ultimately imposed 50 percent duties only on semi-finished copper products and derivatives, exempting refined cathode, and the Commerce report originally due June 30 has yet to produce a published decision, with the proposed schedule at 15 percent from January 1, 2027 and 30 percent from 2028. Metal shipped on a tariff bet cannot be re-exported without paying freight twice, so it sits still. The COMEX-LME spread has narrowed from over 3,000 dollars per tonne in July 2025 to about 310 dollars, closing the arbitrage window and stalling new shipments.
Mine supply is tightening at the same time. The ICSG cut its 2026 mine growth forecast from 1.6 to 1.3 percent; Grasberg and Kamoa-Kakula remain constrained by earlier incidents, Chile's August output was the lowest since February 2011, and a legal strike began at the Centinela mine on October 7. Concentrate scarcity is further limiting smelter output, so the surplus on paper is not turning into metal that reaches buyers, and Chinese importers keep paying up for what can.
For importers of non-ferrous metals and downstream fabricators, this combination of a global surplus and a regional shortage carries four implications. First, negotiate the Yangshan premium as a real cost component: landed cost equals the exchange price plus premium, freight and financing, and at 200 dollars per tonne the premium is far too large to ignore when benchmarking against LME alone. Second, watch the US refined copper tariff decision as the trigger. Once the direction is clear, the flow of America's stockpile will change and premium and freight structures will reset, so long-term purchase agreements should retain re-pricing clauses. Third, build routing flexibility into transport plans. If US stocks start moving out, transatlantic and transpacific metal volumes will rise in stages; confirm slot availability and handling arrangements with carriers in advance. Fourth, separate pricing bases in long-term contracts, specifying LME or SHFE benchmarks and how premiums settle, so regional price gaps do not quietly eat the margin.
The global balance sheet says copper is abundant; China's spot window says otherwise. What sets the price is not the total but the location of the metal, and what sets a shipper's cost is whether the logistics can keep up with the shift.
