Major players actively reduced prices to clear inventory before the holiday, with premiums continuing to decline this week [SMM Weekly Review of Spot Copper Cathode in South China]

SMM News on April 30:

Guangdong Region: This week, the premiums and discounts in the region showed a volatile downward trend. Although Guangdong's inventory continued to decline this week, the action of major players clearing their warehouses for the holiday led to a decline in premiums. As of Thursday, high-quality copper was quoted at a premium of 300 yuan/mt, up 50 yuan/mt from last Thursday. Standard-quality copper was quoted at 150 yuan/mt, down 50 yuan/mt from last Thursday. SX-EW copper was quoted at a premium of 100 yuan/mt, down 50 yuan/mt from last Thursday. It is worth noting that the recent tight supply of high-quality copper has led to a continuous expansion in the price spread between standard-quality copper and high-quality copper. On Thursday, the price spread of premiums and discounts for standard-quality copper between Shanghai and Guangdong was 50 yuan/mt higher in Shanghai, with a relatively small spread that did not allow for cross-regional cargo transfers. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 14,600 mt, down 10,500 mt from last Thursday. The total warrants were 6,800 mt, down 2,800 mt from last Thursday. Specifically: This week, warehouse arrivals were 9,000 mt/week, up slightly by 1,000 mt/week from last week, far below the annual average (14,000 mt/week). This week, the arrivals of imported copper increased, but the arrivals of domestically produced copper remained relatively low. Outflows from warehouses were 19,400 mt/week, down 1,500 mt/week from last week, higher than the annual average (14,200 mt/week). Downstream stockpiling actions before the holiday were the main reason for the significantly higher outflows than normal levels.

Looking ahead to next week, with the completion of maintenance at surrounding smelters, arrivals are expected to increase. In terms of downstream consumption, it is reported that new orders for copper rod enterprises and copper pipe & tube enterprises have already started to decline, and consumption is expected to decrease after the holiday compared to before the holiday. Therefore, we believe that next week will see an increase in supply and a weakening in demand, with weekly inventory expected to rise again and spot premiums likely to continue to decline.

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