SHANGHAI, Feb 13 (SMM) – Weaker domestic demand in the first quarter of the year and the smaller LME contango structure could lower Yangshan copper import premiums in the short term.

As of Tuesday February 12, Yangshan copper premiums stood at $60-76/mt for warehouse warrants and $59-74/mt for bill of lading, barely changed from before the Chinese New Year break, SMM assessments showed.

Sellers tended to hold offers firm while weak demand sidelined buyers. Overall trades at the start of the first week after CNY holidays were poor.

The most-traded copper contract on the Shanghai Futures Exchange began trading in the new lunar year weakly, which weighed on its LME counterpart. The three-month contract on the London Metal Exchange relinquished most of the gains made last week. But LME copper continued to outperform its SHFE counterpart and this expanded losses on imported copper.

In the first quarter of 2019, maintenance at Chilean copper smelters, a lack of new capacity coming online and low inventories are set to tighten supplies of spot copper overseas. Domestically, the commissioning of new capacity and a seasonal lull in consumption grew inventories.

SMM calculations showed that losses on imported copper stood at around 1,100 yuan/mt as of February 12.

Tight supplies overseas narrowed the cash-to-three months spread on the LME, which stood at a contango of $14.25/mt as of Monday February 11. The narrowing contango structure is likely to prompt cargo holders to lower offers to discharge cargoes.