SHANGHAI, May 2 (SMM) – Weak demand and the new, lower value-added tax (VAT) weighed down spot copper offers in Shanghai on Wednesday April 2. Spot copper with invoices for May was mostly offered at a discount of 50 yuan/mt to a premium of 20 yuan/mt over the SHFE 1805 contract.
Prices fell in both the copper futures and spot market in Shanghai on the first trading day after the Labour Day holiday. Eager to destock, sellers and traders lowered offers as downstream buyers did not stockpile as expected. At noon, offers for standard-quality copper were heard at a discount of 50 yuan/mt, and higher-grade copper at a discount of 10 yuan/mt. Transactions were mostly from traders who had purchased when prices dipped.
At noon, higher-grade copper mostly traded at 50,740-50,820 yuan/mt and standard-quality copper traded at 50,720-50,780 yuan/mt.
SMM currently assesses spot copper with invoices for May based on the new VAT rate of 16%. We see sellers further lowering offers to a discount of 150-50 yuan/mt within this week, in order to boost transactions.
In the mid-to-long term, the VAT cut will ease the tax burden and costs of both upstream and downstream companies in the copper industry and provide support for their corporate structure upgrading.
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