SHANGHAI, Mar 22 (SMM)—In the Shanghai market, spot discounts stabilised at 120-100 yuan/mt for standard-quality copper after delivery last week, and 80-50 yuan/mt for high-quality copper. Several sellers sold off amid copper price rebound, lowering spot discounts to 130 yuan/mt. Discounts of hydro-copper expanded to 250 yuan/mt. Most of the sellers refrained from widening spot discounts significantly, while traders pushed for lower prices. Downstream processing companies restocked when prices pulled back. Trades were relatively brisk.
In Shandong, spot premiums stood at around 50 yuan/mt as the contango of the SHFE next-month copper contract stood at around 150 yuan/mt over the SHFE front-month contract on Monday, the last trading day before delivery. Spot discounts stabilised at around 100 yuan/mt from Tuesday. Quotes by smelters were mixed. Downstream buying interest improved. Spot quotes are expected to stabilise this week.
In north China, spot quotes plunged last week. Spot copper was quoted with discounts of 200-140 yuan/mt, or an average discount of 170 yuan/mt, on March 12, and was quoted with discounts of 360-280 yuan/mt, or an average discount of 320 yuan/mt on March 19, down 150 yuan/mt. The current consumption recovery in north China has been slow, while a overly large price spread between copper cathode and copper scrap has prompted wire and cable plants to step up purchases of copper rod produced with secondary copper, weakening consumption of copper rods produced with copper cathode. This combined with inventory pressure forced smelters to sell at lower prices. Spot quotes are unlikely to rise noticeably this week.
In Guangdong, spot quotes continued to trend lower last week, driven by sellers lowering their quotes. As of March 19, spot discounts for high-quality copper fell 170 yuan/mt from March 12 to 50 yuan/mt, and discounts for standard-quality copper stood at 160 yuan/mt, a decline of 200 yuan/mt. Hydro-copper was quoted with discounts of 210 yuan/mt, down 200 yuan/mt from a week earlier. On Thursday, the price spread on standard-quality copper between Shanghai and Guangdong remained unchanged at 40 yuan/mt, leaving no opportunities for cargo transfer. As of Friday March 19, total inventories in Guangdong stood at 78,500 mt, a decrease of 164 mt from March 12.
Arriving shipments decreased 1,800 mt to 17,500 mt, slightly lower than the weekly average of 18,200 mt for 2020. Smelters refrained from shipping cargoes in large volumes as inventory returned to normal levels after delivery. Meanwhile, smelters exported some cargoes. Shipments from Guangdong increased 1,700 mt to 17,500 mt, marginally below the weekly average of 18,100 mt in 2020. Continued recovery in downstream consumption, coupled with resumption at a copper rod plant early last week that suspended production two weeks ago is likely to drive recovery in consumption this week. Therefore, we expect that spot discount will stand at around 200 yuan/mt. Some traders will purchase cargoes.
