SHANGHAI, Mar 31 (SMM)—Spot discounts in Shanghai stabilised at 140-70 yuan/mt last week. Downstream buyers continued to restock at 65,500-66,500 yuan/mt, growing shipments from social warehouses. Standard-quality copper with large discounts were desirable for traders before the completion of long-term contracts, preventing spot discounts from narrowing despite sharp declines in SHFE copper prices.
Spot quotes in Shandong stabilised last week with discounts of around 150 yuan/mt. The backlog of finished product inventory at smelters has driven shipments to the south by some smelters and supply pressure in Shandong. Downstream buyers continued to restock at lows, improving trades.
In north China, spot premiums trended lower last week. Spot copper was quoted with discounts of 360-280 yuan/mt, or an average discount of 320 yuan/mt, on March 19, and was quoted with discounts of 380-300 yuan/mt, or an average discount of 340 yuan/mt on March 26, down 20 yuan/mt. The current inventory pressure at smelters in the north remains significant. This combined with stock liquidation at the end of the month prompted sellers to lower prices, resulting in weak prices in north China. Smelters shipped cargoes to east China aggressively. Spot quotes should remain weak this week and are unlikely to rise until after the Qingming Festival which will fall on April 3-5.
In Guangdong, spot quotes diverged. Prices for high-quality copper fell as supply under warrants increased. Quotes for standard-quality copper rose as sellers refrained from lowering prices. As of March 26, spot discounts for high-quality copper fell 30 yuan/mt from March 19 to 80 yuan/mt, and discounts for standard-quality copper stood at 150 yuan/mt, a gain of 10 yuan/mt. Hydro-copper was quoted with discounts of 200 yuan/mt, up 10 yuan/mt from a week earlier. On Friday, the price spread on standard-quality copper between Shanghai and Guangdong shrank 40 yuan/mt to 10 yuan/mt, leaving no opportunities for cargo transfer.
As of March 26, total inventories in Guangdong stood at 72,600 mt, a drop of 5,880 mt from March 19, and falling for two consecutive weeks due to lesser arriving shipments and increased shipments from Guangdong. Arriving shipments decreased 4,800 mt to 12,700 mt, well below the weekly average of 18,200 mt in 2020, due to increased exports by smelters amid export profits and deliveries for long-term contracts by smelters. Shipments from Guangdong increased around 1,000 mt to 18,500 mt, marginally above the weekly average of 18,100 mt in 2020. A copper rod company which halted production due to overly high finished product inventory last week has resumed normal production. Operating rates rose at other processing companies. Producers are expected to restock ahead of the Qingming Festival. As such, spot discounts are expected to inch higher this week.
