The large outflow of warrants has increased market supply, and spot premiums have dropped significantly [SMM spot copper in South China]

SMM News on June 18:

Today, spot prices against the front-month contract for #1 copper cathode in Guangdong were reported at a premium of 140 yuan/mt to 220 yuan/mt, with an average premium of 180 yuan/mt, a decrease of 40 yuan/mt from the previous trading day. SX-EW copper was reported at a premium of 80 yuan/mt to 100 yuan/mt, with an average premium of 90 yuan/mt, a decrease of 30 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 78,840 yuan/mt, an increase of 145 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,750 yuan/mt, an increase of 155 yuan from the previous trading day.

Spot Market: Guangdong's inventory has declined for two consecutive days, primarily due to limited arrivals. Despite the reduction in inventory, warrants are flowing out, increasing the available supply. Consequently, suppliers have had to lower prices to sell, resulting in a 140 yuan/mt decrease in the premium for spot standard-quality copper. Additionally, as downstream players generally expect premiums to continue declining in the future, they are prioritizing long-term contracts, which is also contributing to the decline in spot order prices. As of 11 a.m., high-quality copper for the front-month contract was reported at a premium of 220 yuan/mt, standard-quality copper at a premium of 140 yuan/mt, and SX-EW copper at a premium of 90 yuan/mt.

Overall, the significant outflow of warrants has increased market supply, leading to a notable decline in spot premiums, with overall trading activity being average.

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