Warrant outflows and moderate restocking demand from end-users force suppliers to lower prices for spot cargo shipments. [SMM South China Spot Copper]

SMM May 20 Report:

Today, spot #1 copper cathode in Guangdong was quoted at a premium of 150-230 yuan/mt against the front-month contract, with an average premium of 190 yuan/mt, down 80 yuan/mt from the previous trading day. SX-EW copper was quoted at a premium of 90-110 yuan/mt, with an average premium of 100 yuan/mt, down 70 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 78,180 yuan/mt, up 200 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,090 yuan/mt, up 210 yuan/mt from the previous trading day.

Spot Market: Guangdong's inventory ended its three-day consecutive increase and began to decline again, primarily due to an increase in outflows from warehouses. Despite the slight decrease in inventory, it failed to halt the continuous decline in premiums. The outflow of warrants suppressed premiums, and downstream users were bearish on premiums, unwilling to purchase at high prices. Additionally, due to relatively low long-term contract prices, downstream manufacturers primarily focused on fulfilling long-term contracts, with limited spot order purchases. As of 11 a.m., high-quality copper for the front-month contract was quoted at a premium of 230 yuan/mt, standard-quality copper at a discount of 150 yuan/mt, and SX-EW copper at a discount of 100 yuan/mt. It is expected that premiums will still have downside room tomorrow, but the room will be limited.

Overall, with the outflow of warrants and moderate restocking demand from users, suppliers can only lower prices to sell, and premiums continue to decline.

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