Copper Prices Pull Back as Consumption Gradually Recovers, Spot Premiums Stop Falling and Rebound [SMM Southern China Spot Copper Cathode Weekly Review]

SMM October 9 News:

Guangdong Region: WoW, spot premiums in the region bottomed out. At the beginning of the week, premiums moved lower due to the approaching delivery date and limited downstream procurement volume. As copper prices continued to decline, downstream restocking increased and inventory decreased, driving premiums higher. As of Thursday, high-quality copper was quoted at a premium of 80 yuan/mt, up 20 yuan/mt WoW; standard-quality copper was quoted at a premium of 20 yuan/mt, up 20 yuan/mt WoW; SX-EW copper was quoted at a discount of 30 yuan/mt, up 30 yuan/mt WoW. Recently, the supply of SX-EW copper has been relatively small, narrowing the price spread between standard-quality copper and SX-EW copper. On Thursday, the price spread of standard-quality copper premiums between Shanghai and Guangdong was 20 yuan/mt higher in Guangdong. The relatively small spread left no room for cross-regional goods transfer. According to SMM statistics, as of Thursday, the total inventory in Guangdong warehouses was 26,300 mt, an increase of 4,500 mt WoW. The total warrants were 10,100 mt, an increase of 3,500 mt WoW. Specifically: WoW, warehouse arrivals were 16,500 mt/week, down 3,300 mt/week, significantly higher than the annual average (14,000 mt/week). With weak downstream consumption, suppliers were more willing to send goods to warehouses, especially nearing the delivery date. Warehouse withdrawals were 11,300 mt/week, down 2,900 mt/week, lower than the annual average (14,200 mt/week). As copper prices remained at yearly highs, downstream restocking willingness was low, leading to sluggish warehouse withdrawals.

Looking ahead to next week, imported copper arrivals are expected to be limited, and domestic copper arrivals are also projected to be lower than last week, with total supply expected to decrease. Regarding downstream consumption: as copper prices retreated from highs, downstream consumption is expected to increase compared to this week. Therefore, we believe next week will see a scenario of declining supply and recovering consumption. Weekly inventory is expected to decline again, and spot premiums are expected to fluctuate higher.

(The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.)