SMM May 15 Report:
Guangdong Region: This week, the region's premiums and discounts have continued to decline. Affected by the high price spread between futures contracts, downstream procurement demand remained low. Suppliers had to continuously lower prices to secure transactions. As of Thursday, high-quality copper was quoted at a premium of 50 yuan/mt, down 200 yuan/mt from last Thursday. Standard-quality copper was quoted at a discount of 100 yuan/mt, down 240 yuan/mt from last Thursday. SX-EW copper was quoted at a discount of 150 yuan/mt, also down 240 yuan/mt from last Thursday. On Thursday, the price spread between Shanghai and Guangdong's standard-quality copper premiums and discounts was 80 yuan/mt higher in Shanghai, indicating limited room for cross-regional cargo transfers due to the small price difference. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 13,100 mt, down 2,200 mt from last Thursday. Warrants totaled 6,300 mt, up 300 mt from last week. Specifically: This week, warehouse arrivals were 11,200 mt/week, up 2,000 mt/week from last week, significantly below the annual average (14,000 mt/week). Imported copper arrivals increased slightly this week, but domestic copper arrivals remained low. Outflows from warehouses were 12,900 mt/week, up 4,400 mt/week from last week, slightly below the annual average (14,200 mt/week). After the Labour Day holiday, downstream procurement volumes increased but remained below normal levels.
Looking ahead to next week, we understand that neither domestic nor imported copper arrivals will increase significantly, and supply will remain tight. On the downstream consumption side, without the impact of the price spread between futures contracts, procurement volumes for most enterprises are expected to increase compared to this week. However, we have learned that a major copper rod enterprise will halt production next week due to reduced orders. It is expected that total consumption next week will remain flat with this week and will not increase significantly. Therefore, we believe that next week will see a situation of tight supply and stable demand, with weekly inventory continuing to decline and spot premiums remaining high.
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