Copper Prices Surged, Downstream Buyers Held Off, Spot Premiums Fell Sharply Amid Weak Trading [SMM Southern China Spot Copper Cathode Weekly Review]

SMM December 26:

Guangdong Region: Premiums and discounts in the region showed a continuous downward trend this week. Copper prices broke through key resistance levels and surged significantly. However, downstream buyers showed weak restocking interest in response; some enterprises even chose to halt production to digest finished product inventories. To facilitate sales, suppliers had to continuously lower premiums to achieve minimal transactions. As of Thursday, high-quality copper was quoted at a discount of 150 yuan/mt, down 220 yuan/mt WoW; standard-quality copper was quoted at a discount of 220 yuan/mt, down 250 yuan/mt WoW; SX-EW copper was quoted at a discount of 290 yuan/mt, down 240 yuan/mt WoW. On Thursday, the price spread for standard-quality copper premiums and discounts between Shanghai and Guangdong was 180 yuan/mt higher in Guangdong. However, the spread did not cover transportation costs, so there was no inter-regional goods transfer. According to SMM statistics, as of Thursday, total warehouse inventory in Guangdong reached 23,700 mt, an increase of 9,200 mt WoW. Total warrants amounted to 8,500 mt, up 3,000 mt WoW. Specifically: warehouse arrivals this week were 16,800 mt/week, an increase of 5,400 mt/week WoW, exceeding the annual average (14,000 mt/week). Due to weak downstream consumption, suppliers had to transfer goods to warehouses. Warehouse withdrawals were 8,100 mt/week, a decrease of 3,400 mt/week WoW, significantly lower than the annual average (14,200 mt/week). After the sharp rise in copper prices, downstream procurement volume dropped sharply, with some enterprises even suspending production.

Looking ahead to next week, as copper prices remain at historically high levels, procurement volumes for many end-users are expected to stay low. Therefore, we anticipate a scenario of increasing supply and weakening demand next week. Weekly inventory is expected to continue rising, and spot premiums are likely to remain low.

(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.)