Continuous Inflow of Imported Copper Threw Cold Water on the High Spot Premiums

SHANGHAI, Aug 24 (SMM) - On August 24, spot premiums of copper cathode in the Shanghai market were 480-560 yuan/mt over the SHFE 2209 copper contract, and the average premium was 520 yuan/mt, down 70 yuan/mt from the previous trading day. Prices of SMM #1 copper cathode were 63,580-63,850 yuan/mt, those of standard-quality copper were 63,580-63,820 yuan/mt, and those of high-quality copper stood at 63,600-63,850 yuan/mt. SHFE 2209 copper contract fell after the opening. And the trend was curbed in the second session, and the prices once hit a high of around 63,520 yuan/mt. Finally, the contract closed at 63,210 yuan/mt.

Premiums of mainstream standard-quality copper were quoted at 560-570 yuan/mt, narrowing its spread with high-quality copper to almost 0 yuan/mt. And the spread between Guixi copper and mainstream standard-quality copper was 20-30 yuan/mt, but the market could hardly see any transactions. Quotes of mainstream standard-quality copper dropped to 500-520 yuan/mt when the first session ended because the inflow of imported copper increased. In the second session, premiums of mainstream standard-quality copper fell below 500 yuan/mt. The spread between cargoes with front-month and next-month Fapiao (Chinese invoices) remained around 30 yuan/mt, and the traded prices fell further compared with the previous trading day.

According to the SMM survey, the production of smelters in east China and central China, which were affected by the power rationing earlier, has improved. In addition, the inflow of imported copper is gradually increasing, and the weather condition in east China improves. SMM believes that the above factors will put pressure on the premiums. However, the decline rate will be limited by the high premiums in Guangdong.