Downstream stocking willingness was weak before the Dragon Boat Festival, and spot premiums were under pressure and declined. [SMM Weekly Review of Spot Copper Cathode in South China]

SMM May 29 report:

Guangdong region: This week, the premiums and discounts in the region showed a trend of jumping initially and then pulling back. At the beginning of the week, influenced by the decline in inventory, standard-quality copper surged to a premium of 180 yuan/mt. However, as the Dragon Boat Festival approached, downstream enterprises completed their restocking, and suppliers, eager to liquidate their holdings, continuously lowered their premiums for shipments, leading to a significant drop in premiums. As of Thursday, high-quality copper was quoted at a premium of 100 yuan/mt, down 150 yuan/mt from last Thursday. Standard-quality copper was quoted at a premium of 30 yuan/mt, down 130 yuan/mt from last Thursday, and SX-EW copper was quoted at a discount of 20 yuan/mt, also down 130 yuan/mt from last Thursday. On Thursday, the price spread between the premiums and discounts of standard-quality copper in Shanghai and Guangdong was 60 yuan/mt higher in Shanghai, indicating a relatively small price difference that did not allow for cross-regional cargo transfers. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 11,900 mt, down 1,400 mt from last Thursday. The total warrants amounted to 2,800 mt, a decrease of 200 mt from last week. Specifically: This week, warehouse arrivals were 10,600 mt/week, down 2,700 mt/week from last week, significantly below the annual average (14,000 mt/week). Both domestic and imported copper arrivals were low this week. Outflows from warehouses were 11,600 mt/week, down 2,200 mt/week from last week, below the annual average (14,200 mt/week). The operating rate of downstream enterprises declined at month-end, and with the approaching Dragon Boat Festival holiday, downstream enterprises' willingness to restock was also low. These factors all contributed to a decrease in consumption this week.

Looking ahead to next week, it is reported that the arrivals of imported copper will be limited next week, but the arrivals of domestic copper are expected to increase. It is anticipated that the total supply next week will be higher than this week. In terms of downstream consumption, affected by the Dragon Boat Festival holiday, the capacity utilization rate of some enterprises will decline, and total consumption will be weaker than this week. Therefore, we believe that next week will see an increase in supply and a decrease in demand, with weekly inventory rising and premiums potentially coming under pressure to fall.

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