Guangdong: In the week of July 1-4, spot premiums and discounts in this region continued to improve. Although inventories kept hitting new highs, most of the arrivals were imported copper, and more standard-quality copper was used for warehouse receipts, reducing the amount of standard-quality copper available in the market. Together with the widening price spread between the front-month and next-month contracts, sellers actively held prices firm, pushing up premiums. However, downstream transactions were weak due to rising copper prices and premiums. As of Thursday, high-quality copper was quoted at a discount of 40 yuan/mt, narrowing 100 yuan/mt from last Thursday; standard-quality copper was quoted at a discount of 100 yuan/mt, narrowing 100 yuan/mt from last Thursday; hydro copper was quoted at a discount of 200 yuan/mt, narrowing 100 yuan/mt from last Thursday. On Thursday, the price spread between Shanghai and Guangdong for standard-quality copper was 80 yuan/mt, leaving no room for cross-regional arbitrage. According to SMM statistics, as of Thursday, the total inventory in Guangdong was 80,700 mt, up 8,700 mt from last Thursday, mainly due to increased arrivals and sluggish outflows from warehouses. Specifically, last week's arrivals were 21,600 mt, up 765 mt WoW, with weekly arrivals far exceeding the weekly average level (14,000 mt) for two consecutive weeks. Last week saw arrivals of both domestic copper and a large amount of imported copper. Outflows from warehouses were 12,800 mt in the week, up 435 mt WoW, lower than the weekly average level (14,200 mt). Early July saw the downstream consumption market not fully recovered, with some copper processing enterprises operating at low rates, keeping outflows at a yearly low.
Looking ahead to this week, SMM understands that Guangdong's imported copper arrivals will significantly decrease, but domestic copper shipments are expected to increase due to the approaching delivery period. We expect this week's supply to slightly decrease. On the demand side, as the finished product inventories of some copper processing enterprises sharply decline, operating rates are expected to rise significantly, increasing copper consumption. Therefore, we believe that this week will see a decrease in supply and an increase in demand, with weekly inventories likely to decrease again and spot premiums to rise slightly.
