SMM February 26:
Guangdong Region: This week, the region's premiums and discounts showed a trend of bottoming out and rebounding. Although inventory continued to increase this week, spot premiums stopped falling and rebounded due to downstream end-users gradually resuming production and increasing procurement volume. As of Thursday, high-quality copper was quoted at a discount of 100 yuan/mt, down 120 yuan/mt from before the Chinese New Year; standard-quality copper was quoted at a discount of 270 yuan/mt, down 170 yuan/mt from before the holiday; SX-EW copper was quoted at a discount of 330 yuan/mt, down 170 yuan/mt from before the holiday. On Thursday, the price spread for standard-quality copper premiums and discounts between Shanghai and Guangdong was 50 yuan/mt higher in Guangdong. The relatively small spread did not lead to cross-regional shipments. According to SMM statistics, as of Thursday, total warehouse inventory in Guangdong reached 93,100 mt, an increase of 43,700 mt from before the Chinese New Year, exceeding the earlier expectation of a 30,000 mt increase. Total warrants amounted to 49,400 mt, up 18,500 mt from before the holiday. The large spot discounts prompted suppliers to actively ship to delivery warehouses, leading to a significant increase in warrant volume. Specifically: During the Chinese New Year period, warehouse arrivals averaged 47,000 mt/week, far above the annual average (14,000 mt/week). The vast majority of downstream enterprises were on holiday during this period, so suppliers shipped goods to warehouses. Warehouse withdrawals averaged 6,000 mt/week, as only a few enterprises remained operational, resulting in very low demand.
Looking ahead to next week, demand is expected to increase continuously as downstream processing enterprises resume production. However, a full recovery is anticipated only after the Lantern Festival, i.e., after next Tuesday. Therefore, inventory is projected to increase first and then decrease next week, and spot premiums are expected to continue rebounding.
(The above information is based on market data 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 information to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.)
