The offshore market performance is fragmented, with frequent changes in structural premiums [SMM Weekly Review of Yangshan Copper]

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        This week (from June 23 to June 27), the weekly average price range of Yangshan copper premiums B/L transactions was $48-75.2/mt, with QP in July and an average price of $61.6/mt, up $1/mt WoW. The price range of warrants was $30-45.2/mt, with QP in June and an average price of $37.6/mt, down $2/mt WoW, with QP in July. The EQ copper CIF B/L price was $3.2-14.8/mt, with an average price of $9/mt, down $2/mt WoW, with QP in July. As of June 20, the SHFE/LME copper price ratio for the SHFE copper 2507 contract was 8.0858, with an import profit margin of around -1,400 yuan/mt. As of Friday, the LME copper 3M-July backwardation was $88.97/mt; the swap fee difference between July date and August date was approximately $42.2/mt backwardation.

        Currently, the firm offer price for high-quality ER copper warrants is $44/mt, with mainstream pyrometallurgical and domestic warrants priced at $30-40/mt. SX-EW spot cargo is hard to find. High-quality copper B/L spot cargo is hard to find, with mainstream pyrometallurgical and domestic B/L priced at around $40-60/mt. SX-EW spot cargo is hard to find. The CIF B/L price for EQ copper ranges from $0/mt to $10/mt, with an average price of $5/mt.

        The spot market saw frequent anomalies this week. Early in the week, the LME Cash-July price spread widened significantly, exceeding a backwardation of $250/mt, with the TOM-NEXT spread reaching $50/mt. The near-month import loss continued to widen, attracting domestic smelters to increase exports to repair the SHFE/LME price ratio. According to SMM, the total volume of copper cathode that could arrive at LME Asian warehouses before July date was approximately 35,000 mt. Meanwhile, a wave of non-domestic re-export B/L purchases emerged during the week, with some domestic warrants rumored to be exported to Europe to replace the cargo from European smelters to the US. As a result, the premiums for domestic warrants and non-domestic re-export B/Ls in the bonded zone remained high, while the premiums for domestic and EQ B/Ls continued to decline due to the low SHFE/LME price ratio, leading to a fragmented offshore market. Looking ahead to next week, Africa is still maintaining a monthly average of around 20,000 mt of copper cathode exports to the US, while South America accounts for most of the US import supply, with only less than 25,000 mt shipped to China each month. European demand also diverts a portion of African copper cathode. Affected by the tight supply of copper cathode in non-US regions, the LME is expected to experience a sustainable backwardation structure, with the near-month backwardation structure expected to remain high, and the repair of the SHFE/LME price ratio seems distant.

        According to the SMM survey, as of Thursday (June 26), copper inventories in domestic bonded zones increased by 4,100 mt from the previous period (June 19) to 68,400 mt. Among them, Shanghai bonded inventories increased by 0.22 mt to 59,200 mt; Guangdong bonded inventories increased by 0.19 mt to 9,200 mt. The main reason for the increase in bonded area inventory this week was still the arrival of copper cathode exported by some smelters to bonded warehouses, with limited new arrivals at ports. According to SMM, warehouses in bonded areas outside Shanghai and Guangdong also saw increases recently. Looking ahead, the export destinations of domestic smelters are mostly LME Asian warehouses, and it is expected that the SHFE/LME price ratio will be difficult to recover by early July. Therefore, it is anticipated that the bonded area inventory will still increase slightly next week.

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