Copper Prices Hit Record High Amid Weak Demand, Spot Cargo Shows Large Discount [SMM Southern China Copper Cathode Spot Weekly Review]

SMM January 29:

Guangdong Region: Premiums and discounts in the region followed an L-shaped trend this week. Due to a sharp rise in copper prices and weak downstream consumption, suppliers had to continuously lower premiums to facilitate transactions. As of Thursday, high-quality copper was quoted at a discount of 120 yuan/mt, down 30 yuan/mt WoW; standard-quality copper was quoted at a discount of 350 yuan/mt, down 150 yuan/mt WoW; and SX-EW copper was quoted at a discount of 400 yuan/mt, down 150 yuan/mt WoW. On Thursday, the price spread for standard-quality copper premiums and discounts between Shanghai and Guangdong was 110 yuan/mt lower in Guangdong. The relatively small spread did not trigger inter-regional shipments. According to SMM statistics, total warehouse inventory in Guangdong reached 44,200 mt as of Thursday, down 3,300 mt WoW, with warrants totaling 22,400 mt, down 4,400 mt WoW. Specifically, warehouse arrivals this week were 12,000 mt/week, down 631 mt/week WoW, below the annual average (14,000 mt/week). Arrivals of both imported copper and domestic copper were relatively low this week. Warehouse withdrawals were 15,300 mt/week, up 1,600 mt/week WoW, slightly above the annual average (14,200 mt/week). Due to low arrivals, downstream users increased purchases from warehouses. Additionally, downstream restocking enthusiasm was moderate when copper prices were low at the beginning of the week, which also contributed to the increase in withdrawals.

Looking ahead to next week, we understand that arrivals of imported copper and domestic copper are not expected to increase significantly, while consumption is expected to decline substantially. On one hand, downstream restocking interest remains low as copper prices are at historical highs; on the other hand, demand will decrease as some processing enterprises begin holidays in February. Therefore, supply is expected to remain flat while demand declines next week, leading to a renewed increase in inventory, with spot premiums staying at low levels.

(The above information is based on market data collection and comprehensive evaluation 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 as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.)