SHANGHAI, Apr 7 (SMM)—Spot trades in Shanghai were subdued initially before improving last week. Sellers were liquidating aggressively early last week due to cash flow issues and large inflows of imported high-quality copper, lowering spot discounts from 70-60 yuan/mt to 120-100 yuan/mt in three days. Standard-quality copper was quoted with discounts of 120 yuan/mt amid tight supply. Traders restocked on Thursday due to sufficient cash and downstream buyers purchased at lows. Spot discounts shrank amid pre-holiday stockpiling and active inquiries. Standard-quality copper was quoted with premiums of 10 yuan/mt, and premiums for high-quality copper stood at 20-30 yuan/mt on Friday. Trades improved noticeably.
In Shandong, spot discount shrank from around 150 yuan/mt at the beginning of the week to around 50 yuan/mt. Prices failed to rise with Shanghai prices. Overall shipments returned to normal, and downstream consumption also picked up. With the onset of the peak season in April, prices in Shandong are expected to rise with Shanghai prices.
In north China, spot premiums rebounded last week. Spot copper was quoted with discounts of 380-300 yuan/mt, or an average discount of 340 yuan/mt, on March 26, and was quoted with discounts of 300-240 yuan/mt, or an average discount of 270 yuan/mt on April 2, up 70 yuan/mt. Inventory pressure at smelters in north China has eased, prompting smelters to raise their quotes. Pre-holiday stockpiling by downstream producers will also account for higher premiums. Higher quotes by smelters coupled with recovery in downstream consumption should bolster spot premiums in north China after Qingming Festival holidays.
Spot quotes in Guangdong continued to rise last week on the back of sufficient cash at the start of the month and pre-holiday stockpiling by downstream producers. As of April 2, spot premiums for high-quality copper rose 150 yuan/mt from March 26 to 70 yuan/mt, and premiums for standard-quality copper stood at 40 yuan/mt, a gain of 190 yuan/mt. Hydro-copper was quoted with discounts of 10 yuan/mt, up 190 yuan/mt from a week earlier. On Friday, the price spread between the price spread on standard-quality copper between Shanghai and Guangdong widened 30 yuan/mt to 40 yuan/mt, leaving no opportunities for cargo transfer.
As of April 2, total inventories in Guangdong stood at 72,000 mt, a drop of 583 mt from March 26, the third consecutive week of decline. Arriving shipments increased 4,600 mt to 17,300 mt, slightly lower than the weekly average of 18,200 mt for 2020, and increased arriving shipments of domestic and imported copper drove the increase. Shipments from warehouses in Guangdong decreased 700 mt to 17,800 mt, slightly below the weekly average of 18,100 mt in 2020. Copper rod companies have frequently adjusted their operating rates recently to control finished product inventory, and halted production last week. Many copper rods plants plan to undertake maintenance during the Qing Ming holidays to reduce finished product inventory. This prevented operating rates at copper rod companies from rising significantly.
Copper consumption is likely to increase this week as copper processing enterprises resume normal production after the long weekend. As such, spot premiums are expected to inch higher this week.
