Continued Significant Decline in Inventory Stimulates Premiums to Rise Sharply, Expected to Continue Rising Next Week [SMM South China Copper Cathode Spot Weekly Review]

Published: Mar 20, 2025 18:40

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SMM Mar 13 News: Guangdong Region: This week, premiums and discounts in the region surged strongly, with the primary reason being a continuous and significant decline in inventory. As of Thursday, high-quality copper was at a premium of 210 yuan/mt, up 120 yuan/mt from the previous Thursday; standard-quality copper was at a premium of 160 yuan/mt, up 130 yuan/mt from the previous Thursday; SX-EW copper was at a premium of 90 yuan/mt, up 140 yuan/mt from the previous Thursday. On Thursday, the price difference between parity copper in Shanghai and Guangdong was 190 yuan/mt, with the gap significantly widening. Attention should be paid to whether there will be more supply from east China next week. According to SMM statistics, as of Thursday, total inventory in Guangdong warehouses was 42,800 mt, down 10,700 mt from the previous Thursday, and total warrants were 32,000 mt, down 6,000 mt from the previous week. Specifically, this week's arrivals remained low at only 4,000 mt/week, a slight increase of 492 mt/week compared to the previous week, far below the annual average (14,000 mt/week). The reasons for the low arrivals in Guangdong were: smelters exporting, increased direct shipments from smelters, higher consumption in other provinces, and some smelters undergoing maintenance and reducing load. Outflows from warehouses were 14,600 mt/week, down 1,200 mt/week from the previous week, slightly above the annual average (14,200 mt/week), with rising copper prices leading to slower downstream demand. Looking ahead to next week, we expect supply to remain low due to increased exports and reduced imports. In terms of downstream consumption, the continuous rise in copper prices has already led to a decrease in new orders, and consumption next week is expected to be lower than this week. Therefore, we believe that both supply and demand will be weak next week, but supply will be lower than demand, resulting in continued declines in weekly inventory, and spot premiums are expected to continue to rise.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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