"Post-Holiday Rapid Recovery in the USD Copper Market, North American Price Spread Widens Again [SMM Yangshan Copper Weekly Review]"

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This week (February 5-7), the weekly average price range of Yangshan copper premiums B/L transactions was $50.67-$64.67/mt, QP March, with an average price of $63/mt, down $5.33/mt WoW. Warehouse warrants were $60.33-$74.33/mt, with an average price of $67.33/mt, down $6.42/mt WoW, QP February. EQ copper CIF B/L ranged from $3/mt to $17/mt, with an average price of $10/mt, unchanged WoW, QP February. As of 15:00 on February 7, the SHFE/LME copper price ratio for the SHFE copper 2502 contract was 8.19, with an import loss of approximately -150 yuan/mt. For the SHFE copper 2503 contract, the SHFE/LME copper price ratio was 8.21, with an import loss of approximately -200 yuan/mt. As of Thursday, the LME 3M-Feb contango was C$105.14/mt, and the February-March date swap fee spread was C$42.5/mt.

Currently, the spot price for pyro high-quality copper warehouse warrants is $73/mt, mainstream pyro copper is $66/mt, and wet-process copper is $59/mt. High-quality copper B/L is $65/mt, mainstream pyro copper is around $58/mt, and wet-process copper is $51/mt. CIF B/L EQ copper ranges from $3/mt to $17/mt, with an average price of $10/mt.

This week marked the first trading week after the Chinese New Year holiday, and the US dollar-denominated copper market rebounded rapidly. During the holiday, LME copper prices fell sharply, widening the price spread between the LME 0-3M contract and the COMEX most-traded contract. Rising premiums in the North American market attracted some traders to redirect supplies from South America and Africa to North America. After the holiday, the SHFE/LME price ratio improved, and market inquiries and offers became active. However, due to significant inventory buildup during the Chinese New Year and inventory backlogs at downstream processing enterprises, demand for warehouse warrants remained weak, and the transaction center shifted downward. Most inquiries focused on cargoes arriving in mid-to-late February, with firm offers for B/L. Looking ahead, February port arrivals are expected to decrease compared to January, with tight supply supporting US dollar-denominated copper market prices. However, rising copper prices have raised concerns about demand, and the SHFE/LME price ratio window is unlikely to fully open. Before the delivery of the SHFE copper 2402 contract, the US dollar-denominated copper market is expected to remain stable, but attention should be paid to the continued cancellations at LME Asian warehouses.

According to the SMM survey, as of Thursday (February 6), copper inventories in domestic bonded zones increased by 8,600 mt WoW to 28,300 mt compared to January 23. Among them, Shanghai bonded inventories rose by 5,700 mt WoW to 21,900 mt, while Guangdong bonded inventories fell by 2,900 mt WoW to 6,400 mt. After the Chinese New Year holiday, inventories in Shanghai and Guangdong bonded warehouses increased as expected, mainly due to concentrated shipments from domestic smelters during the holiday. Additionally, some downstream enterprises suspended production before the holiday, leading to slow cargo pick-up and insufficient short-term effective demand. With rising overseas copper prices closing the import profit window and significant inventory buildup in domestic social warehouses during the holiday, demand for bonded zones is expected to remain weak. Bonded zone inventories are projected to increase slightly next week.

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