SHANGHAI, Jul 16 (SMM) – Spot premiums of imported copper fell all the way in June due to the backwardation structure of LME copper and weakened demand in the Chinese market, SMM believes.
As of Monday July 16, SMM assessed Yangshan copper premiums (warehouse warrant) at $62-75/mt, down $13/mt from $75-88/mt throughout May, while premiums for cargoes under bill of lading at $61-73/mt, down $10.5/mt from $72-83/mt in May.
LME copper prices flipped into backwardation in June with costs for warehouse warrants growing. Supply of warehouse warrants exceeded the demand with massive sell-offs.
Losses on imported copper were significant in June, hovering around 1,000 yuan/mt, as LME spot copper prices turned to be premiums over the contract rather than discounts and as Chinese yuan trod on the downward track. This hampered buying interest for imported materials.
Demand for imported copper was also jeopardised by enterprises’ cash woes towards the end of the first half of the year and a seasonal lull in downstream consumption.
The premiums, however, stablised last week as LME copper prices flipped back to contango with shrinking import losses. Demand for imported materials also slightly recovered.