Year-End Offshore Market Trading Sluggish, Post-Market Price Change Factors Intertwined [SMM Analysis]

        This week (December 29-31), the weekly average price range for Yangshan copper premiums for B/L transactions was $44-56/mt, QP January, with an average price of $50/mt, down $3.4/mt WoW. Warrant premiums were $46-57.33/mt, QP January, averaging $51.67/mt, down $1.9/mt WoW. EQ copper CIF B/L premiums were $2.67-13.33/mt, QP January, averaging $8/mt, down $3/mt WoW. As of December 31, the SHFE/LME copper price ratio for the SHFE 2601 contract, excluding forex, was 1.1283, with an import profit margin around -700 yuan/mt. As of Wednesday, the LME copper 3M-Jan contango was BACK $48.52/mt; the spread between the January date and February date swap fees was about BACK $9.6/mt.

        Currently, the actual price for high-quality ER copper warrants is $54/mt, mainstream pyrometallurgical and domestic warrants are $40-50/mt, and SX-EW warrants are $40-45/mt. The actual price for high-quality copper B/L is $50-55/mt, mainstream pyrometallurgical and domestic B/L are around $40-50/mt, and SX-EW B/L is $40/mt. EQ copper CIF B/L premiums are $2-12/mt, averaging $7/mt.

        There were only three trading days this week, and the spot market was characterized by a strong off-season atmosphere. As exports in January are expected to see significant growth, warrant and B/L premiums were under pressure. Affected by the need for capital repatriation, spot liquidity was weak. Looking ahead, trading sentiment in the spot market is expected to recover significantly after the New Year's Day holiday. Domestic smelters will begin large-scale exports, while some foreign trade long-term contracts will start to be executed, and demand from traders for spot circulation is expected to increase. Yangshan copper premiums have significant upside room after a brief stabilization next week.

        According to the SMM survey, as of this Thursday (December 31), copper inventories in domestic bonded areas increased by 100 mt WoW from the previous period (December 25) to 75,500 mt. Specifically, Shanghai bonded inventories decreased by 600 mt WoW to 66,700 mt, while Guangdong bonded inventories increased by 700 mt WoW to 8,800 mt. Bonded area inventories were largely flat this week, with overall arrivals in Shanghai decreasing, while exports from the Huangpu bonded area in Guangdong continued to increase. Looking ahead, smelter exports are expected to continue increasing after the New Year's Day holiday, and bonded area inventories are expected to see continued buildup.