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What Impact on Yangshan Copper Premiums from Tightening of Transit L/C Issuance? SMM Reports
May 24,2016 11:23CST
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Source:SMM
Banks in Shanghai have tightened transit L/C issuance to traders since April, SMM learns, and how has this affected Yangshan copper premiums?

SHANGHAI, May 24 (SMM)–Banks in Shanghai have tightened transit L/C issuance to traders since April, SMM learns, and how has this affected Yangshan copper premiums? 

Yangshan copper premiums, after hovering around $45-55 per tonne for nearly one month since April, dropped to $40-50 per tonne on May 17 and 18, but a day later, the premiums returned to $45-55 per tonne. 

What factors are behind the change? 

“Traders rushed to sell on-hand products after meeting difficulties in getting transit L/Cs, and combined with sales of goods, having been stored in warehouses for nearly three months, the premiums went lower,” SMM copper analyst explains.  

But, traders, after selling old goods, returned to the market for new supplies, and some large traders also looked for goods after premiums fell to $40 per tonne, which was profitable after selling them to buyers in Southeast Asian countries, SMM notes. 

The narrowing of import losses recently, down as low as 290 yuan per tonne, also generated some import activities, SMM adds. 

“The rise in Yangshan copper premiums is not expected to be sustainable, as overall domestic demand for imports remains weak,” SMM predicts. 

SMM survey finds that a majority of traders are pessimistic over premiums for goods under bill of lading due to ample supply and poor sales.   

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