Persistent Inventory Declines and Active Supplier Efforts to Hold Prices Firm Drive Spot Premiums Higher [SMM Southern China Spot Copper Cathode Weekly Review]

SMM November 27 News:

Guangdong Region: This week, spot premiums in the region fluctuated rangebound after an initial surge. The main reason for the rise in premiums was suppliers holding prices firm and selling amid continuously declining inventory. As of Thursday, high-quality copper was quoted at a premium of 160 yuan/mt, up 60 yuan/mt WoW; standard-quality copper was quoted at a premium of 80 yuan/mt, up 70 yuan/mt WoW; and SX-EW copper was quoted at a premium of 10 yuan/mt, up 70 yuan/mt WoW. On Thursday, the price spread for standard-quality copper premiums between Shanghai and Guangdong was 70 yuan/mt, a relatively small difference that left no room for inter-regional goods transfer. According to SMM statistics, total warehouse inventory in Guangdong as of Thursday was 13,600 mt, down 3,800 mt WoW, with warrants totaling 5,600 mt, down 3,200 mt WoW. Specifically, warehouse arrivals this week were 10,700 mt/week, down 738 mt/week WoW and below the annual average (14,000 mt/week). Arrivals of both domestically produced and imported copper were relatively low this week. Warehouse withdrawals were 14,500 mt/week, up 1,309 mt/week WoW, slightly below the annual average (14,200 mt/week). Due to low warehouse arrivals, downstream enterprises increased their cargo pick-up volume from warehouses, leading to the rise in weekly warehouse withdrawals.

Looking ahead to next week, arrivals are expected to remain relatively low without significant increase. Regarding downstream consumption: procurement volume at the beginning of the month is anticipated to increase compared to last week, but the increment is relatively small. Therefore, we believe next week will see a situation of tight supply and increased demand, with weekly inventory expected to continue declining and spot premiums rising.

(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 their own independent judgment. Any decisions made by clients are unrelated to SMM.)