Despite continuous inventory declines failing to boost premiums, weak consumption remains the primary factor [SMM Southern China Copper Cathode Spot Weekly Review]

SMM October 9:
Guangdong Region:

Premiums and discounts in the region remained stable with little change this week. Although inventory continued to decline, downstream restocking enthusiasm was weak due to high copper prices, making it difficult for suppliers to refuse to budge on prices, resulting in stable premiums. As of Thursday, high-quality copper was quoted at a premium of 100 yuan/mt, up 20 yuan/mt WoW; standard-quality copper was quoted at a premium of 30 yuan/mt, up 10 yuan/mt WoW; and SX-EW copper was quoted at a discount of 20 yuan/mt, up 10 yuan/mt WoW. On Thursday, the price spread for standard-quality copper premiums between Shanghai and Guangdong was 60 yuan/mt higher in Guangdong, a relatively small difference that left no room for inter-regional transfers. According to SMM statistics, total warehouse inventory in Guangdong as of Thursday was 22,100 mt, down 4,200 mt WoW, with warrants totaling 10,100 mt, down 1,300 mt WoW. Specifically: weekly warehouse arrivals this week were 11,700 mt/week, down 4,800 mt/week WoW, significantly below the annual average (14,000 mt/week). Affected by smelter production cuts and exports, arrivals decreased noticeably this week. Warehouse withdrawals were 16,000 mt/week, up 4,600 mt/week WoW, slightly above the annual average (14,200 mt/week). After the holiday, downstream enterprises gradually adapted to high copper prices, and procurement volume began to increase; additionally, due to poor arrivals, downstream enterprises increased purchases from warehouses.

Looking ahead to next week, we understand that arrivals of both imported copper and domestic copper will be limited. Regarding downstream consumption: high copper prices continue to constrain the recovery of downstream consumption, and as month-end approaches, enterprise financial constraints will also restrict procurement volume. Therefore, we believe next week will see a situation of weak supply and demand, with weekly inventory expected to continue declining, and spot premiums are expected to fluctuate higher, but the increase will be limited.

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