A Significant Decline in Inventory Boosts Premiums, But Downstream Restocking Demand Remains Moderate Near Month-End [SMM South China Spot Copper]

SMM, February 26:

Today, spot #1 copper cathode in Guangdong was quoted at a discount of 70 yuan/mt to parity against the front-month contract, with an average discount of 35 yuan/mt, up 5 yuan/mt from the previous trading day. Hydro copper was quoted at a discount of 200-160 yuan/mt, with an average discount of 180 yuan/mt, down 10 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 77,070 yuan/mt, up 125 yuan/mt from the previous trading day, while the average price of hydro copper was 76,925 yuan/mt, up 110 yuan/mt from the previous trading day.

Spot market: Guangdong inventory declined for the second consecutive day, mainly due to reduced arrivals and increased outflows from warehouses. The sharp drop in inventory prompted suppliers to stand firm on quotes. In the early session, standard-quality copper was once quoted at a discount of 40 yuan/mt. However, as month-end approached, downstream restocking demand remained weak, coupled with the availability of low-priced granular copper, forcing suppliers to lower their quotes. This resulted in a trend of rising first and then falling for standard-quality copper today. As of 11:00 am, high-quality copper was quoted at parity against the front-month contract, standard-quality copper at a discount of 70 yuan/mt, and hydro copper at a discount of 180 yuan/mt. Moving forward, attention will remain on whether inventory continues to decline, as further decreases could support a rise in premiums.

Overall, the sharp drop in inventory drove premiums higher, but weak downstream restocking demand near month-end led to less active trading compared to yesterday.

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