Decreased arrivals, combined with lower copper prices and increased restocking, drove spot premiums sharply higher [SMM South China Copper Cathode Spot Weekly Review]

SMM June 11:

Guangdong: This week, spot premiums in the region sustained a rapid rebound, as reduced arrivals coupled with lower copper prices prompted suppliers to actively hold prices firm, lifting spot premiums sharply higher. As of Thursday, high-quality copper was quoted at 240 yuan/mt, up 210 yuan/mt from last Thursday; standard-quality copper was quoted at a premium of 180 yuan/mt, up 210 yuan/mt from last Thursday; and SX-EW copper was quoted at a premium of 120 yuan/mt, up 200 yuan/mt from last Thursday. On Thursday, the price spread of standard-quality copper premiums between Shanghai and Guangdong showed Guangdong at a 170 yuan/mt premium. The relatively small spread meant there were no inter-regional cargo transfers. According to SMM statistics, as of Thursday, total inventory in Guangdong warehouses stood at 12,400 mt, down by 10,400 mt from last Thursday. Total warrants were 4,500 mt, down by 1,300 mt from last Thursday. Specifically: Warehouse arrivals this week were 8,200 mt/week, down 5,300 mt/week WoW, well below the annual average (14,000 mt/week). Smelter shipments decreased significantly this week, and imported copper volumes were also limited. Warehouse withdrawals were 18,400 mt/week, up 6,200 mt/week WoW, above the annual average (14,200 mt/week). Sharply lower copper prices and reduced arrivals forced end-users to pick up more cargo from warehouses.

Looking ahead to next week, as the delivery date approaches, arrivals next week are expected to increase compared to this week, while end-use consumption is expected to remain stable. Inventory may stop falling, and spot premiums are expected to hover at highs.

(The above information is based on market data collection and comprehensive assessment by the SMM research team. The information provided herein is for reference only. This document does not constitute direct investment research advice. Clients should make decisions prudently and not rely on this as a substitute for independent judgment. Any decisions made by clients are not related to Shanghai Metals Market.)