Yangshan Copper Premiums Skyrocketed amid Open Import Window

SHANGHAI, Aug 23 (SMM) – Hectic trades sent Yangshan copper premiums rising sharply last week.

Yangshan copper premiums with a quotation period in September stood at $60-140/mt under warrants during August 16-20, and between $57-120/mt under bill of lading (B/L). The SHFE/LME copper price ratio stood at 7.48 as of August 20.

. Domestic power curtailment, shortage of copper scrap and limited inflow of imported copper have bolstered fundamentals. Continued inventory declines buoyed the backwardation structure on SHFE copper. The SHFE/LME copper price ratio improved remarkably last week as LME copper prices plunged. Import profits rose to 300 yuan/mt versus the SHFE September contract, incentivising customs clearances. Merchants raised their quotes significantly amid low availability of cargoes, especially for cargoes under warrants and under B/L slated to arrive in the short term. Quotes for mainstream pyro-copper under warrants stood at around $70/mt early in the week and rose to $130/mt at the end of the week. Import premiums for warrants are currently quoted at $105-140/mt, up $57.5/mt from a week earlier on average, and quotes for B/L stand at $90-120/mt, a rise of $42.5/mt. Traders are optimistic in view of tight supply. Some traders have begun to transport copper from LME warehouses to China amid the surge in import premiums, which are expected to arrive in the second half of September.

Traded import premiums for high-quality pyro-copper currently stood at around $140/mt under warrants, $130/mt for mainstream pyro-copper and $105/mt for hydro-copper. On the B/L front, premiums were $120/mt for high-quality copper, $110/mt for mainstream pyro-copper, and $90/mt for hydro-copper. The quotation period is in September.

Copper inventories in the Shanghai bonded zone decreased 12,200 mt from August 13 to 368,500 mt as of August 20, a sixth straight week of decline. Yangshan copper premiums surged amid tight supply, with the average premium under warrants surging over $50/mt in three trading days. Continued imports under warrants are likely to driven further declines in bonded zone inventories.