Spot Copper Prices in Guangdong Will Fall This Week

Spot quotes in Guangdong continued to decline last week. The inflow of imported copper at the beginning of the week weighed on spot quotes. Last Friday, rising copper prices combined with the approaching of the delivery of the SHFE April contract depressed downstream purchasing demand, causing sellers to cut prices. As of last Friday, high-quality copper was quoted with discounts of 10 yuan/mt, down 40 yuan/mt from a week earlier, and standard-quality copper was quoted with discounts of 40 yuan/mt, down 40 yuan/mt. Hydro-copper was quoted with discounts of 100 yuan/mt, down 10 yuan/mt. The price spread between high-quality and standard-quality copper expanded as the delivery neared.

Last Friday, the prices in Shanghai exceeded those in Guangdong by 70 yuan/mt. The price gap was so small that there was no opportunity for cargo transfer between the two regions. As of last Friday, total inventories in Guangdong stood at 48,000 mt, a decline of 2,800 mt from a week earlier.

The arriving shipments rose 400 mt to 13,800 mt as shipments from smelters to warehouses grew ahead of delivery of the April copper contract, but were still lower than to the weekly average of 19,000 mt for 2022. Shipments of copper cathode leaving the warehouses in Guangdong grew 2,500 mt to 16,500 mt, lower than the weekly average of 19,500 mt for 2022. This is because downstream plants resumed normal operating rates after the Chinese Qingming Festival.

This week, the inflows of cargoes into warehouses after delivery will decrease, but cargoes under warrants will be offered for sale after the delivery, increasing the total supply. SMM expects consumption to remain stable. Therefore, the supply will grow slightly and consumption will stabilise this week. Spot quotes will drop slightly.