Consumption first declined and then rose this week, with spot premiums following the trend of bottoming out and rebounding. [SMM Weekly Review of Spot Copper Cathode in South China]

SMM May 22 Report:

Guangdong Region: This week, the premiums and discounts in the region followed a bottom-out-and-rebound trend. At the beginning of the week, influenced by the contract rollover, spot premiums surged significantly. However, downstream manufacturers showed relatively weak purchasing interest amid high premiums. As a large number of warrants flowed out after delivery, spot premiums continued to decline. By Thursday, premiums had dropped to a relatively low level, prompting downstream buyers to buy the dip, which stimulated premiums to stop falling and rebound. As of Thursday, high-quality copper was quoted at a premium of 250 yuan/mt, up 200 yuan/mt from last Thursday. Standard-quality copper was quoted at a premium of 160 yuan/mt, up 260 yuan/mt from last Thursday. SX-EW copper was quoted at a premium of 110 yuan/mt, up 260 yuan/mt from last Thursday. On Thursday, the price spread between premiums and discounts for standard-quality copper in Shanghai and Guangdong was 50 yuan/mt lower in Shanghai, indicating a relatively small price difference with no room for cross-regional cargo transfers. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 13,300 mt, a slight increase of 200 mt from last Thursday. The combined warrants were 3,000 mt, a decrease of 3,300 mt from last week. Specifically: This week, warehouse arrivals were 13,300 mt/week, an increase of 2,000 mt/week from last week, slightly below the annual average (14,000 mt/week). Arrivals of imported copper increased slightly this week, while arrivals of domestic copper remained relatively low. Outflows from warehouses were 13,800 mt/week, an increase of 900 mt/week from last week, slightly below the annual average (14,200 mt/week). After the contract rollover, downstream buyers waited for premiums to decrease before resuming large-scale purchases. Therefore, the outflows from warehouses this week did not change significantly from last week.

Looking ahead to next week, it is reported that arrivals of imported copper will remain limited next week, while arrivals of domestic copper will only increase slightly. It is expected that the total supply next week will be slightly higher than this week. In terms of downstream consumption, with the resumption of production at a major enterprise, total demand is expected to increase compared to this week. Therefore, we believe that next week will see an increase in both supply and demand, with weekly inventory expected to decline again and spot premiums likely to rebound slightly.

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