Key Macroeconomic Indicators for Base Metal Prices (2017-5-25)

Adani Enterprises’ Kutch Copper plans to integrate 115 MW of renewable energy at its Mundra smelter as it targets doubling annual copper production capacity to 1 million tonnes while reducing carbon emissions.

[Shanghai spot copper market] Looking ahead to tomorrow, SMM recorded social inventory in Shanghai at 66,500 mt, up 11,800 mt WoW from last Thursday, mainly due to concentrated arrivals of imported copper. Social inventory in Jiangsu was recorded at 19,800 mt, down 2,600 mt WoW, mainly due to fewer domestic arrivals combined with normal downstream cargo pick-up and warehouse withdrawals. With the significant replenishment of imported supply in Shanghai, the tightness of available supply in the market has further eased. Meanwhile, as delivery approaches, open interest in the SHFE copper 2610 contract stood at about 31,000 lots by midday, with SHFE warrants at just over 8,000 mt. The intraday backwardation between the front and next-month contracts remained high, and suppliers showed strong willingness to sell, continuously lowering quotes to facilitate transactions. Spot trading center shifted rapidly from premiums of 300-400 yuan/mt in early trading to around 50-80 yuan/mt. On the demand side, high copper prices combined with the high backwardation continued to curb downstream purchasing enthusiasm, with processing enterprises mainly making just-in-time procurement and limited willingness to chase higher prices. Overall, with increased imported supply, active selling by suppliers, and pressure from the high price spread between futures contracts, spot premiums in Shanghai are expected to remain under pressure tomorrow, likely holding at slight premiums and continuing to pull back slightly.