The outflow of a large number of warrants has led to a decline in premiums, and it is expected that premiums will remain difficult to rise next week [SMM Weekly Review of Copper Cathode Spot in South China]

SMM News on July 24:
 Guangdong region: This week, the premiums and discounts in this region followed an L-shaped trend. At the beginning of the week, influenced by an increase in inventory and a rise in copper prices, premiums fell rapidly. After Wednesday, premiums stabilized and stopped declining, but the large outflow of warrants made it difficult for premiums to rise. As of Thursday, high-quality copper was quoted at a premium of 30 yuan/mt, a decrease of 70 yuan/mt from last Thursday. Standard-quality copper was quoted at a discount of 50 yuan/mt, a decrease of 80 yuan/mt from last Thursday. SX-EW copper was quoted at a discount of 100 yuan/mt, a decrease of 80 yuan/mt from last Thursday. On Thursday, the price spread between standard-quality copper premiums and discounts in Shanghai and Guangdong was 140 yuan/mt higher in Shanghai. Mid-week, the spread once widened to 170 yuan/mt, with a significant portion of cargoes from South China being redirected to the east China market due to the spread. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 18,700 mt, a substantial decrease of 7,100 mt from last Thursday. The combined warrants were 6,800 mt, a significant decrease of 11,000 mt from last Thursday. Specifically: This week, the arrivals at the warehouse were 8,800 mt/week, a substantial decrease of 6,800 mt/week from last week, far below the annual average (14,000 mt/week). Shipments from smelters decreased after delivery. Outflows from warehouses were 16,000 mt/week, an increase of 2,500 mt/week from last week, higher than the annual average (14,200 mt/week). The large outflow of warrants and the recovery in consumption led to an increase in outflows from warehouses.

Looking ahead to next week, it is reported that imported copper will still be in short supply, but domestic copper arrivals will increase slightly. In terms of consumption, as copper prices remain high and approach month-end, consumption will decline. Therefore, we believe that next week will see an increase in supply and a decrease in demand, with weekly inventory expected to increase slightly and premiums remaining at a low level.

(The above information is based on market collection and comprehensive assessment by the SMM research team. The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make cautious decisions and not rely on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.)