Copper Prices Plunge, Downstream Restocking Increases, Spot Premiums Rise [SMM South China Spot Copper]

SMM December 15:

Today, spot #1 copper cathode in Guangdong traded at premiums of 100-180 yuan/mt against the front-month contract, with the average premium at 140 yuan/mt, up 45 yuan/mt from the previous trading day. SX-EW copper was quoted at premiums of 10-50 yuan/mt, with the average premium at 30 yuan/mt, up 30 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 92,375 yuan/mt, down 1,275 yuan/mt from the previous trading day, while the average price of SX-EW copper was 92,265 yuan/mt, down 1,290 yuan/mt from the previous trading day.

Spot market: After the weekend, inventory in Guangdong ended three consecutive declines and increased again, primarily due to higher arrivals. As the delivery date approached, smelters actively shipped goods to warehouses. Copper prices fell sharply today, prompting end-users to increase replenishment compared to last Friday. Suppliers seized the opportunity to hold prices firm and sell, driving today's premiums higher. Procurement sentiment for copper cathode in Guangdong was 2.05 today, up 0.24 from the previous trading day, while sales sentiment was 2.56, down 0.13 (historical data can be queried in the database). Notably, as today was the delivery day, in addition to front-month contract quotes, next-month contract quotes were also available. Standard-quality copper was quoted at a discount of 50 yuan/mt against the next-month contract. The main reason for the widening price spread against the front-month contract was the large price spread between futures contracts.

Overall, the sharp decline in copper prices led to increased replenishment by downstream users, pushing spot premiums higher.