Spot Inventory Hit a Record Low for the Same Period in History, Pushing the Premium Into Triple Digits [SMM South China Copper Cathode Spot Weekly Review]

SMM News, April 2:

Guangdong: Spot premiums in the region continued to rise this week. Robust downstream demand, coupled with tight supply, kept inventory falling and in turn pushed up spot premiums. As of Thursday, high-quality copper was quoted at 200 yuan/mt, up 80 yuan/mt from last Thursday; standard-quality copper was quoted at a premium of 110 yuan/mt, up 80 yuan/mt WoW; SX-EW copper was quoted at 50 yuan/mt, up 90 yuan/mt WoW. As of Thursday, the price spread in standard-quality copper premiums between Shanghai and Guangdong stood at Guangdong being 190 yuan/mt higher. As the spread continued to widen, there was temporarily no cross-region cargo transfer this week, and attention should be paid to whether such transfers will emerge next week. According to SMM statistics, as of Thursday, total inventory in Guangdong warehouses was 45,500 mt, down 16,100 mt from last Thursday and down 52,200 mt from the year’s high, while warrants totaled 26,000 mt, down 9,600 mt from last Thursday. Specifically, warehouse arrivals this week were 8,200 mt/week, down 800 mt/week WoW and far below the annual average level of 14,000 mt/week. Affected by maintenance at nearby smelters, arrivals of domestic copper remained limited, and replenishment from imported copper was also scarce. Warehouse withdrawals were 24,000 mt/week, down 5,700 mt/week WoW, but still far above the annual average level of 14,200 mt/week. Although warehouse withdrawals declined slightly from last week, they remained above the average level, mainly due to robust downstream consumption, which kept warehouse withdrawals high.

Looking ahead to next week, with a nearby smelter still under maintenance and arrivals of imported copper also limited, supply is expected to remain tight next week. On the demand side, it is understood that most copper rod enterprises are still operating at full capacity and said this can continue until mid-April. Therefore, demand is expected to continue exceeding supply next week, inventory will keep falling, and spot premiums are expected to continue rising.

(The above information is based on market collection and the comprehensive assessment of the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and should not use this as a substitute for their own independent judgment. Any decisions made by clients are unrelated to SMM.)