SHFE/LME price ratio continues to deteriorate, warehouse warrant premium collapses, and market divergence further widens [SMM Yangshan Spot Copper].

February 21, 2025: Today, warehouse warrant prices ranged from $38/mt to $50/mt, QP March, with an average decrease of $10/mt compared to the previous trading day; B/L prices ranged from $48/mt to $60/mt, QP March, with an average decrease of $2/mt compared to the previous trading day. EQ copper (CIF B/L) ranged from $2/mt to $10/mt, QP March, with an average decrease of $1/mt compared to the previous trading day. The quotations referenced cargoes arriving in late February and early March.

During the day, the SHFE/LME price ratio for SHFE copper 2503 contract was around -1,250 yuan/mt. LME copper 3M-Mar was at Back $1.6/mt, while March date to April date was around Back $4.45/mt. The SHFE/LME price ratio continued to deteriorate during the day due to concerns over increased export volumes from domestic smelters in the future, leading suppliers to sell bonded warehouse warrants at low prices. However, due to tight supply of forward-month B/Ls, registered B/Ls and EQ cargoes remained firm in actual transactions. A reverse premium emerged between warehouse warrants and B/Ls, with significant disagreements between buyers and sellers.

Currently, the actual transaction price for pyro high-quality copper warehouse warrants is $50/mt, mainstream pyro is $44/mt, and wet-process is $38/mt. High-quality copper B/Ls are priced at $60/mt, mainstream pyro at around $54/mt, and wet-process at $48/mt. CIF B/L EQ copper ranges from $2/mt to $10/mt, with an average of $6/mt.