Yangshan copper premiums averaged $29.7/mt under warrants in May, up $1.81/mt month-on-month, and $49.55/mt under bill of lading, up $8.79/mt month-on-month.
In mid-May, import profit once expanded to above 500 yuan/mt, and traded Yangshan copper premiums rose. Due to the weak financing attributes of warrants, the cost of warrants was high. This, combined with expectations of buyers that domestic spot premiums will not rise sharply, weighed on traded premiums under warrants. In terms of bills of lading, traded import premiums edged up in anticipation of tight supply of cargoes scheduled to arrive in June.
In June, domestic copper cathode output slid due to concentrated maintenance at some smelters. However, the proportion of LME cancelled warrants rose rapidly in June, and the contango structure of LME copper narrowed rapidly. As of June 9, the proportion of cancelled warrants was 55.38%. The cancelled cargoes were concentrated in Asian warehouses and will arrive in the domestic market in batches after June 25. The consumption has cooled down. Domestic social inventory of copper will accumulate. Yangshan copper premiums will gradually fall.