Shanghai Copper vs LME Copper

Copper prices play a pivotal role in global trade, influencing industries from electronics to construction. At Copperled, we prioritize transparency and accuracy in our pricing, which is why we base our quotations on the Shanghai Copper (SHFE) benchmark rather than the London Metal Exchange (LME) price. Below, we outline the key differences between these two markets and explain why aligning with Shanghai Copper ensures optimal value for our clients.

1. Geographical Market and Supply Chain
The copper raw materials we use are mainly sourced from the domestic market in China, with Shanghai being a key trading hub for copper. The entire supply chain, from copper ore procurement, smelting to copper product manufacturing, is closely related to the Shanghai copper market. In contrast, the LME price mainly reflects the supply - demand relationship and price trends in international markets, especially in Europe and America. It has little direct connection with our actual raw material procurement channels and supply system.

2. Cost Composition Discrepancies

· Logistics and Tariff Costs: If we were to purchase copper based on the LME price, it would involve high logistics costs and tariffs. After adding these extra costs, the actual cost of the copper arriving at our factory may be higher than when we purchase it based on the Shanghai copper price. When calculating the price of our products, we need to consider the comprehensive cost, so using the Shanghai copper price, which can better reflect the actual procurement cost, is more reasonable.

· Processing Costs and Domestic Industrial Chain: The copper processing industry in China has its own specific cost structure and industrial chain support. The Shanghai copper price already incorporates, to a certain extent, the cost factors of the domestic copper processing links, which is well - matched with our production and processing processes. The LME price, mainly focused on copper metal trading, does not fully take into account the cost structure and profit margins of domestic copper processing enterprises. Using the LME price as the basis for cost calculation may lead to significant deviations in our cost calculation and fail to accurately reflect the true cost of our products.

3. Industry Practices and Contractual Agreements

· Industry - wide Practice: In the domestic data patch cord cables production industry, using the Shanghai copper price as the basis for price calculation is a common industry practice. Most peer companies adopt this method, which has become a widely recognized industry standard. By following this practice, we can ensure the rationality and comparability of prices in the market competition and also facilitate cost accounting and business docking with upstream and downstream enterprises.

We hope this explanation helps you better understand our pricing mechanism. If you have any further questions or need more information, please feel free to let us know. We are always here to assist you.

Best Regards,

International Marketing Dept.

Shenzhen Copperled Technology Co., Ltd