The spot market showed significant divergence during the week, with Yangshan copper premiums plummeting at the end of the week [SMM Yangshan Copper Weekly Review]

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This week (June 3-6), the weekly average price range of Yangshan copper premiums B/L transactions was $74-106.5/mt, with QP June, and the average price was $90.25/mt, down $14.75/mt WoW. The price range of warrants was $66.5-76.5/mt, with QP June, and the average price was $71.5/mt, down $18.7/mt WoW, QP June. The EQ copper CIF B/L price was $32.5-47/mt, with an average price of $39.75/mt, down $29.25/mt WoW, QP June. As of May 30, the SHFE/LME copper price ratio for the SHFE copper 2506 contract was 8.0898, and the import profit margin was around -1,500 yuan/mt. As of Friday, LME copper 3M-Jun was in backwardation of $80.91/mt; the spread between the June date and July date swap fees was approximately BACK $31/mt.

Currently, the actual price of high-quality ER copper warrants is $47/mt, mainstream pyrometallurgy and domestic warrants are priced at $30-40/mt, and SX-EW spot cargo is hard to find. High-quality copper B/L spot cargo is hard to find, mainstream pyrometallurgy and domestic warrants are priced at around $50-80/mt, and SX-EW spot cargo is hard to find. CIF B/L EQ copper is priced at $8-20/mt, with an average price of $14/mt.

The offshore market experienced significant fluctuations this week. As the LME-COMEX price spread widened to around $1,300/mt at the beginning of the week, CME registered B/L and Australian copper arriving in mid-to-early June were swept up, with transactions exceeding $200 at the beginning of the week. However, the SHFE/LME price ratio continued to decline, and domestic warrant and B/L quotes fell, making it difficult to secure transactions. As a result, there were significant differences between buyers and sellers during the week, and market transaction prices diverged widely. Due to large traders hoarding inventories in the global market, the LME backwardation structure rose to $80/mt at the end of the week, and the destocking process in Asia continued. Overall, supplies began to concentrate and move towards bonded areas. Looking ahead to next week, LME inventories are expected to continue declining before the June date, as there is limited room for the copper price ratio to recover amid rising copper prices. Under the combined impact of onshore B/L and export supplies, Yangshan copper premiums for both warrants and B/L are unlikely to rebound, and the market is expected to remain divided in the short term. The LME backwardation structure is expected to continue expanding upwards, and the holding costs for suppliers are expected to increase. The market is expected to rebound when domestic inventories start to decline again. Yangshan copper premiums are expected to continue declining slightly.

According to the SMM survey, as of Thursday (June 5), domestic bonded area copper inventories rose by 3,800 mt from the previous period (May 29) to 58,000 mt. Among them, Shanghai bonded area inventories rose by 0.25 mt to 52,000 mt, and Guangdong bonded area inventories rose by 1,300 mt to 6,000 mt. The main reason for the rebound in bonded area inventory this week was the decrease in active customs clearance imports caused by the deterioration of the SHFE/LME price ratio. In terms of supply, LME canceled B/Ls continued to arrive at ports. Additionally, with the opening of the export window, domestic smelters successively formulated new export plans, leading to a temporary halt in the overall inventory drawdown. Looking ahead, it is expected that some domestic smelters will export to bonded sources next week. Coupled with the slow arrival and customs clearance of imported B/Ls, it is anticipated that bonded warehouse inventory will continue to increase.

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