SMM December 18:
Guangdong: This week, premiums and discounts in the region showed a trend of retreating after a rapid rise. Prices were firm before the contract rollover at the beginning of the week. After the rollover, weak downstream consumption coupled with increased circulating supply due to warrant outflows led to continuously declining premiums. As of Thursday, premiums for high-quality copper were reported at 70 yuan/mt, down 20 yuan/mt WoW; premiums for standard-quality copper were reported at 30 yuan/mt, down 10 yuan/mt WoW; discounts for SX-EW copper were reported at 50 yuan/mt, down 20 yuan/mt WoW. On Thursday, the price spread for standard-quality copper premiums between Shanghai and Guangdong was 230 yuan/mt higher in Guangdong. The large spread created room for arbitrage, and some east China copper flowed to the Guangdong market mid-week. According to SMM statistics, as of Thursday, total warehouse inventory in Guangdong was 14,500 mt, down 3,000 mt WoW, while total warrants were 5,600 mt, up 3,000 mt WoW. Specifically: warehouse arrivals this week were 11,400 mt/week, down 1,600 mt/week WoW, significantly lower than the annual average (14,000 mt/week). Arrivals for both imported copper and domestic copper were low this week. Warehouse withdrawals were 11,400 mt/week, down 217 mt/week WoW, lower than the annual average (14,200 mt/week). Downstream consumption became more sluggish after the contract rollover, and enterprises' restocking desire was low. Additionally, smelters are currently heard offering long-term contract prices for 2026 copper cathode at 260 yuan/mt, up 130 yuan/mt from the previous year. However, such high prices are generally not accepted by downstream users, and both sides remain in a stalemate.
Looking ahead to next week, arrivals of imported copper are not expected to increase, but arrivals of domestic copper are expected to increase. Downstream consumption is expected to remain sluggish. Therefore, we believe next week will see a situation of increasing supply and weakening demand. Weekly inventory is expected to increase slightly, and spot premiums are expected to continue to decline.
(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.)
