Spot Premiums in Guangdong Hovered At Highs As Inventory Continued To Decline Last Week, but Are Likely To Fall This Week

The premiums in Guangdong fluctuated around 200 yuan/mt last week due to falling inventories. As of last Friday, the spot premiums for high-quality copper dipped 20 yuan/mt from a week ago to 210 yuan/mt, and the premiums for standard-quality copper stood at 200 yuan/mt, flat from a week ago. Hydro-copper was quoted with premiums of 140 yuan/mt, a decline of 10 yuan/mt from a week ago.

Last week, as a large volume of high-quality copper under warrants was released and imported copper flowed into the spot market, high-quality and hydro-copper prices fell more sharply than standard-quality copper. Last Friday, the prices in Guangdong exceeded those in Shanghai by 20 yuan/mt. The price gap was so small that there was no opportunity for cargo transfer between the two regions. As of last Friday, total inventories in Guangdong stood at 34,900 mt, a decline of 5,100 mt.

Arriving shipments increased 3,000 mt to 12,700 mt, still below the weekly average of 19,000 mt for 2022, due to increased arriving shipments of imported copper and goods from other provinces. Shipments of copper cathode leaving the warehouses in Guangdong grew 1,100 mt to 18,100 mt last week, lower than the weekly average of 19,500 mt for 2022. Narrower price spread between copper cathode and copper scrap caused downstream buyers to purchase copper cathode to replace copper scrap and this boosted copper cathode consumption. This week, it is understood that the amount of imported copper will increase and smelters will also increase shipments at the end of the month, but the consumption of downstream factories may not be as good as last week.

SMM expects supply to grow and demand to weaken this week. Inventory will grow slightly. In addition, more warrants will flow into the market amid high premiums. Therefore, spot premiums will fall.

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