The copper market in the U.S. dollar was sluggish during the week, with the price spread between warehouse warrants and B/L gradually narrowing [SMM Yangshan Copper Weekly Review]

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This week (June 9-13), the weekly average price range for Yangshan copper premiums B/L transactions was US$49.2-72/mt, with QP July, and the average price was US$60.6/mt, down US$1.8/mt WoW. The price range for warrants was US$31.2-48/mt, with QP June, and the average price was US$39.6/mt, down US$0.4/mt WoW, with QP July. The EQ copper CIF B/L price was US$4-18/mt, with an average price of US$11/mt, down US$1.6/mt WoW, with QP July. As of June 20, the SHFE/LME copper price ratio for the LME copper vs. SHFE copper 2507 contract was 8.1351, with an import profit margin around -700 yuan/mt. As of Friday, the LME_CA_CASH contract vs. July date backwardation structure was Back US$50.28/mt; the swap fee difference between the July date and August date was approximately BAC US$20.3/mt.

Currently, the actual price for high-quality ER copper warrants is US$47/mt, with mainstream pyrometallurgy and domestic warrants priced at US$30-40/mt, and SX-EW spot cargoes hard to find. High-quality copper B/L spot cargoes are hard to find, with mainstream pyrometallurgy and domestic B/Ls priced at around US$50-70/mt, and SX-EW spot cargoes hard to find. The CIF B/L EQ copper price is US$4-18/mt, with an average price of US$11/mt.

The spot market remained sluggish this week. Early in the week, JX Nippon Mining & Metals Corporation announced a 10% reduction in smelting production at one of its smelters, with more investment in secondary copper raw materials for production. Expectations for production cuts at overseas smelters continued to materialize. Mid-week, the backwardation structure between the LME_CA_CASH contract and the July date expanded significantly, with most traders selling off near-term arrivals and holding long-term inventories to observe the market outlook, resulting in weak spot transactions. Due to a slight recovery in the price ratio at the end of the week, smelters' willingness to export weakened, and the new voluntary export volume from smelters in June-July remained unchanged at 50,000-60,000 mt. Looking ahead to next week, the continuous increase in bonded area inventories will put pressure on warrant premiums, making it difficult for them to rise. Market transactions will recover after the July long-term contracts are gradually announced. However, the price ratio window is unlikely to open in the short term. According to market news, the S232 investigation is expected to have preliminary results in mid-July, increasing the risk of re-exporting to the US. The price spread between CME registered B/Ls and domestic brands will narrow, and it is expected that Yangshan copper premiums will revert to being driven by the price ratio.

According to the SMM survey, as of Thursday (June 19), copper inventories in domestic bonded areas increased by 4,600 mt from the previous period (June 12) to 64,300 mt. Among them, Shanghai bonded inventories increased by 0.33 mt to 57,000 mt, and Guangdong bonded inventories increased by 1,300 mt to 7,300 mt. The main reason for the increase in bonded area inventories this week was the arrival of copper cathode exported by some smelters to bonded warehouses, coupled with the conversion of some arrived B/Ls into warrants due to low imported copper premiums, leading to an increase in bonded area inventories. Looking ahead, the current SHFE/LME price ratio has recovered slightly. In the short term, it is expected that domestic smelters will continue their export activities, but there will be few new export plans. Bonded warehouse inventories are expected to increase significantly by the end of June.

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