LC Price Spread Hits Record High Again; Long-Term Contract Shipment Delays Cause Offshore Premiums to Surge [SMM Yangshan Copper Weekly Review]

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This week (March 17-21), the weekly average price range for Yangshan copper premiums B/L was $81.8 to $95.8/mt, QP April, with an average of $88.8/mt, up $8.6/mt WoW. Warrant prices were $54.6 to $65/mt, averaging $59.8/mt, up $9.8/mt WoW, QP April. EQ copper CIF B/L prices were $24 to $34/mt, averaging $29/mt, up $12/mt WoW, QP April. As of March 21, the SHFE/LME copper price ratio for SHFE copper contract 2504 was 8.17, with import profit/loss around -900 yuan/mt. By Friday, LME copper 3M-Apr was C$18.64/mt; the 4th month and 5th month date swap fee difference was C$14.95/mt.

Currently, high-quality ER copper warrant spot prices are $75/mt, mainstream pyrometallurgy is $70/mt, and hydrometallurgy is $65/mt; high-quality copper B/L prices are $105/mt, mainstream pyrometallurgy is around $98/mt, and hydrometallurgy is $91/mt; EQ copper CIF B/L prices are $30 to $40/mt, averaging $35/mt.

This week, the supply liquidity in the spot market decreased, but buyer inquiries were significantly more active. According to SMM, the delivery pace of long-term contracts for April continued to be delayed, with most long-term contracts not fully delivered or delayed, leading to a chain reaction. The market saw a large volume of long-term contract shorts, and near-port EQ B/L and warrant premiums continued to rise, reaching around $80/mt by the end of the week in Shanghai and Huangpu. CME registered B/L premiums remained high, and after the LME-COMEX price spread hit a new historical high this week, CME registered brand B/L premiums surged. It was heard that 3rd grade B/Ls arriving in March-April were traded at over $200, and buyers still had room to bid higher to secure supplies.

According to the SMM survey, on Thursday (March 20), domestic bonded zone copper inventories rose 10,400 mt from the previous period (March 13) to 73,100 mt. Shanghai bonded inventory increased 10,300 mt to 63,300 mt, while Guangdong bonded inventory rose 100 mt to 9,800 mt. Bonded zone inventories continued to increase this week, partly due to fixed exports by domestic smelters caused by the price ratio, and also because the high premium markets in Southeast Asia attracted some traders to seek FOB export sources. Overall, the bonded zones have become a reservoir for the US dollar copper market in the Asian region, and it is expected that inventories will continue to rise next week.

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