Increased exports by smelters reduce domestic supply, causing spot premiums to fluctuate and rise. [SMM Weekly Review of Spot Copper Cathode in South China]

SMM June 12 News:

Guangdong Region: This week, the premiums and discounts in the region have shown a volatile upward trend. Influenced by the export activities of nearby smelters, domestic supply has decreased, and inventory in the region has declined for six consecutive days. As a result, premiums have continued to rise this week. As of Thursday, high-quality copper was quoted at a premium of 100 yuan/mt, up 50 yuan/mt from last Thursday. Standard-quality copper was quoted at a premium of 20 yuan/mt, up 100 yuan/mt from last Thursday. SX-EW copper was quoted at a discount of 40 yuan/mt, up 90 yuan/mt from last Thursday. On Thursday, the price spread between premiums and discounts for standard-quality copper in Shanghai and Guangdong was 20 yuan/mt higher in Shanghai, indicating a relatively small spread with no room for cross-regional cargo transfers. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 20,100 mt, down 3,500 mt from last Thursday. The total warrants were 9,200 mt, up 2,100 mt from last Thursday. When spot discounts were large at the beginning of the week, some suppliers chose to transfer to delivery warehouse. Specifically: This week, warehouse arrivals were 10,300 mt/week, down 10,300 mt/week from last week, below the annual average (14,000 mt/week). The opening of the export window and increased exports by smelters have reduced domestic supply. Outflows from warehouses were 14,000 mt/week, up 3,400 mt/week from last week, slightly below the annual average (14,200 mt/week). After the Dragon Boat Festival, downstream enterprises resumed normal production, leading to a significant increase in outflows from warehouses this week compared to last week.

Looking ahead to next week, we understand that smelters will continue to export next week, and the domestic supply will remain limited. It is expected that the total supply next week will decrease compared to this week. In terms of downstream consumption, after the delivery, spot premiums are expected to rise again, which may suppress downstream consumption. Next week's consumption will be weaker than this week's. Therefore, we believe that next week will see a situation of weak supply and demand, with weekly inventory expected to continue to decline but not by a large margin. Premiums are expected to rise in a volatile manner.

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