SMM: Copper Cathode Inventory in Guangdong Kept Falling, and When Will it Come to an End?

SHANGHAI, Sep 9 (SMM) - Copper cathode inventory in Guangdong has been falling for 10 consecutive sessions to as low as 21,400 mt according to SMM, a significant drop of 82,400 mt or 79.4% from YTD high of 103,800 mt. The level is close to the 4-year low of the same period.

SMM believes that the declining in inventory will extend in the short term and may not reverse until after the National Day for reasons as follows:

On the supply side, domestic supply has improved recently but not fully recovered. Power restrictions in Guangxi has eased since September but influences remained. Some smelters were still under maintenance and are not expected to recover until the end of the month. The volume of imported copper is unlikely to see significant increase in the near future, affected by the shipping schedule.

On the demand side, price spread between copper cathode and copper scrap was still narrow, and demand of copper cathode from the downstream sector stayed high. It is expected that many downstream enterprises still have pre-holiday replenishment demand ahead of the Mid-Autumn Festival and the National Day holiday, and the overall demand will be considerable in September.

Therefore, SMM believes that copper cathode inventory in Guangdong will continue to fall in the short term, and even to a low of 11,600 mt lastly seen in 2018, until after the National Day.