LME inventories stop falling and rebound, with price ratio recovering but market remaining sluggish [SMM Yangshan Copper Weekly Review]

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        This week (from June 30 to July 4), the weekly average price range of Yangshan copper premiums B/L transactions was $31.2-67.6/mt, with QP in August and an average price of $49.4/mt, down $12.2/mt WoW. The warrant price was $20-40/mt, with QP in July and an average price of $30/mt, down $7.6/mt WoW. The EQ copper CIF B/L price was (-$9)-$14.8/mt, with QP in August and an average price of -$1.6/mt, down $9.6/mt WoW. As of July 4, the SHFE/LME copper price ratio for the SHFE copper 2507 contract was 8.1048, with an import profit margin of around -800 yuan/mt. As of Friday, the LME copper 3M-July was in a backwardation of $56.17/mt; the swap fee difference between July date and August date was approximately BAC $34/mt.

        Currently, the actual price of high-quality ER copper warrants is $40/mt, mainstream pyrometallurgical and domestic warrants are priced at $25-35/mt, and SX-EW spot cargo is hard to find; high-quality copper B/Ls are hard to find, mainstream pyrometallurgical and domestic B/Ls are priced at around $40-60/mt, and SX-EW spot cargo is hard to find; CIF B/L EQ copper is priced at -$11/mt to $7/mt, with an average price of -$2/mt.

        The spot market was sluggish this week. After the near-month positions were rolled over, LME inventories stopped falling and slightly rebounded. The first batch of smelter export cargoes completed transfer to delivery warehouse, and the LME TOM-NEXT spread gradually narrowed. Although the SHFE/LME price ratio recovered, suppliers' active imports remained inactive, and offshore markets mainly traded transshipment B/Ls. As the LME-COMEX spread surged above $1,400/mt at the beginning of the week, CME delivery brand transactions exceeded $300/mt. Looking ahead to next week, the number of B/Ls arriving in July is still limited. Due to the lower premiums in the Chinese region, some African cargoes decided to be shipped to Europe, the US, and Southeast Asia, keeping the July supply tight. After the price ratio recovered, it is expected that Yangshan copper premiums will stop falling and rebound.

        According to the SMM survey, domestic bonded zone copper inventories rose by 4,500 mt to 72,900 mt this Thursday (July 3) compared to the previous period (June 26). Among them, Shanghai bonded zone inventories rose by 0.38 mt to 63,000 mt; Guangdong bonded zone inventories rose by 9,900 mt to 72,900 mt. The main reason for the increase in bonded zone inventories this week was the increase in domestic exports to bonded zones and the relatively few active customs declarations for imports. In addition, according to SMM, some bonded warehouse inventories will be shipped to the LME next week. Looking ahead, as the LME July date approaches, domestic suppliers still have some transfer to delivery warehouse actions. Due to the decline in domestic premiums, it is difficult to open the import window. Therefore, it is expected that the inventory in the bonded area will still increase slightly next week.

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