SMM, February 27:
Guangdong Region: This week, premiums and discounts in the region showed a fluctuating upward trend, with continuously declining inventory being the main driver for rising premiums. As of Thursday, high-quality copper was quoted at a premium of 10 yuan/mt, up 60 yuan/mt WoW; standard-quality copper was quoted at a discount of 70 yuan/mt, up 50 yuan/mt WoW; hydro copper was quoted at a discount of 150 yuan/mt, up 80 yuan/mt WoW. The price spread between hydro copper and standard-quality copper narrowed due to reduced hydro copper supply. On Thursday, the price spread of standard-quality copper premiums and discounts between Shanghai and Guangdong was 60 yuan/mt higher in Guangdong, which was relatively small, leaving no room for cross-regional transfers. According to SMM statistics, as of Thursday, the total inventory in Guangdong was 67,700 mt, down 5,900 mt WoW, with warehouse warrants totaling 47,300 mt, down 4,400 mt WoW. Specifically, this week’s arrivals were 10,100 mt/week, down 10,100 mt WoW, below the annual average level (14,000 mt/week). It is reported that some smelters organizing shipments for export contributed to the decline in arrivals. Outflows from warehouses were 16,400 mt/week, above the annual average level (14,200 mt/week). With reduced arrivals, downstream users had to pick up more goods from warehouses.
Looking ahead to next week, as smelters are expected to continue exporting, arrivals are likely to remain limited. On the consumption side, at the beginning of the month, enterprises with sufficient funds, combined with the pullback in copper prices, are expected to increase their procurement volume. Therefore, we believe that next week will see a scenario of reduced supply and increased demand, leading to a further decline in weekly inventory. However, the continuous outflow of a large number of warehouse warrants will suppress the rise in spot premiums.
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