SMM, February 6:
Guangdong Region: After the holiday, spot premiums in this region showed a trend of bottoming out and rebounding. On the first day after the holiday, due to a significant increase in inventory and the fact that most downstream enterprises had not yet resumed production, suppliers were forced to lower prices to sell. As downstream production gradually resumed and demand increased, spot premiums also stopped declining and began to rebound. As of Thursday, high-quality copper was quoted at a premium of 0 yuan/mt, unchanged from before the holiday; standard-quality copper was quoted at a discount of 330 yuan/mt, down 70 yuan/mt from before the holiday; hydro copper was quoted at a discount of 370 yuan/mt, down 30 yuan/mt WoW, as the supply of hydro copper was relatively small and the price spread with standard-quality copper was narrow. On Thursday, the price spread of standard-quality copper premiums and discounts between Shanghai and Guangdong was 310 yuan/mt lower in Guangdong, leading to a significant portion of south China's copper cathode being transferred to east China. According to SMM statistics, as of Thursday, the total inventory in Guangdong was 52,400 mt, a sharp increase of 26,900 mt from before the holiday, with warehouse warrants totaling 20,180 mt, up 12,000 mt from before the holiday. Specifically, during the Chinese New Year period, arrivals were 28,900 mt, while outflows from warehouses were only 2,000 mt.
Looking ahead to next week, as downstream enterprises have not yet fully resumed normal production and many smelters still have goods in transit that have not been warehoused, coupled with the current large discounts, smelters are inclined to send goods to warehouses for delivery. Therefore, we expect an oversupply situation next week, with weekly inventory continuing to increase.
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