Weak consumption and inventory increase, spot premiums have turned into discounts [SMM spot copper in South China]

SMM May 30 report:

Today, spot #1 copper cathode in Guangdong was quoted at a discount of 20 yuan/mt to a premium of 50 yuan/mt against the front-month contract, with an average premium of 15 yuan/mt, down 50 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 80 yuan/mt to a discount of 60 yuan/mt, with an average discount of 70 yuan/mt, down 50 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 78,110 yuan/mt, down 255 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,025 yuan/mt, down 255 yuan/mt from the previous trading day.

Spot market: Inventory in Guangdong has increased significantly for two consecutive days. Suppliers have a need to clear inventory at month-end, coupled with low downstream restocking demand ahead of the Dragon Boat Festival, leading to a rapid rise in inventory. Affected by this, suppliers can only continuously lower premiums to sell goods. Standard-quality copper has already fallen to a discount, although high-quality copper remains firm in its quotes due to limited supply, with the price spread between it and standard-quality copper widening. As of 11 a.m., high-quality copper against the front-month contract was quoted at 50 yuan/mt, standard-quality copper at a discount of 20 yuan/mt, and SX-EW copper at a discount of 70 yuan/mt. Attention should be paid to whether inventory will continue to increase after the Dragon Boat Festival.

Overall, with weak consumption and rising inventory, spot premiums have turned into discounts. Attention should be paid to whether inventory will continue to increase after the holiday.

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