Chinese Metal Exchanges: Price Discovery, Inventory Signals, and Cross-Market Arbitrage

The Shanghai Futures Exchange has displaced the LME as the dominant price-setting venue for several base metals in the Asia-Pacific, accounting for a large share of global base-metals futures turnover. SHFE copper inventories swung from a March 2025 peak near 377,000 tonnes to below 90,000 tonnes by mid-year, a drawdown that preceded tighter spot conditions by several weeks and underlines the value of exchange stocks as a forward signal. The Yangshan copper premium, which tracks the incentive to import refined metal, spiked in early 2025 before fading as the SHFE-LME spread narrowed. The 2024 Western ban on Russian-origin metal has accelerated its flow into SHFE-approved warehouses, reinforcing the exchange's role as the effective global price-setter for that material, while moves toward offshore SGE delivery point to RMB-denominated benchmarking ahead.