SMM, February 13:
Guangdong Region: This week, spot premiums in this region showed a continuous upward trend. With downstream enterprises gradually resuming production and increasing demand, coupled with the SHFE approving an additional 10,000 mt of delivery warehouse capacity, the increase in deliverable goods reduced the actual circulating supply. Under these favorable conditions, spot premiums rose rapidly. As of Thursday, high-quality copper was quoted at a premium of 30 yuan/mt, up by 30 yuan/mt WoW; standard-quality copper was quoted at a discount of 20 yuan/mt, up by 310 yuan/mt WoW; hydro copper was quoted at a discount of 100 yuan/mt, up by 270 yuan/mt WoW. The increased supply of hydro copper widened its price spread with standard-quality copper. On Thursday, the price spread of standard-quality copper between Shanghai and Guangdong was 0 yuan/mt, indicating a relatively small spread with no room for cross-regional transfers. According to SMM statistics, as of Thursday, the total inventory in Guangdong stood at 66,900 mt, up by 14,500 mt WoW, with warehouse warrants totaling 33,400 mt, up by 13,200 mt WoW. Specifically, this week's arrivals were 29,900 mt/week, significantly higher than the annual average level (14,000 mt/week). Due to the relatively high inventory backlog at smelters and the significant spot premiums and discounts, suppliers were more inclined to send goods to warehouses. Outflows from warehouses were 17,000 mt/week, higher than the annual average level (14,200 mt/week). With downstream enterprises resuming production, demand also increased accordingly. According to our understanding, some copper rod enterprises have already reached full production this week.
Looking ahead to next week, with the approach of delivery, warehouse arrivals are expected to continue increasing. After the Lantern Festival, downstream enterprises are expected to fully resume production, further boosting demand. Therefore, we believe that next week will see a robust supply and demand scenario, with weekly inventory continuing to rise, though the increase is expected to be smaller than this week.
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