Post-holiday inventory surge coupled with major traders actively cutting prices drove premiums sharply lower [SMM South China spot copper]

SMM, October 8:

Today in Guangdong, #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a premium of 400 yuan/mt, down 500 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 100 yuan/mt, down 500 yuan/mt from the previous trading day; SX-EW copper was quoted at a premium of 40 yuan/mt, down 500 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 111,890 yuan/mt, up 760 yuan/mt from the previous trading day, while the average price of SX-EW copper was 111,680 yuan/mt, up 760 yuan/mt from the previous trading day.

Spot market: After the holiday, Guangdong's inventory surged by more than 10,000 mt. During the holiday, consumption was weak as most copper processing enterprises were closed for 5-6 days, and suppliers had to deliver their cargoes to warehouses. The sharp inventory increase, combined with some suppliers eager to cash out, led to aggressive price cuts, causing premiums to fall sharply today. Overall trading was better than before the holiday. Today, the purchasing sentiment for copper cathode in Guangdong was 2.62, up 1.02 from the previous trading day, while the selling sentiment was 2.91, up 0.89 from the previous trading day (historical data can be accessed via the database).

Overall, the sharp inventory increase after the holiday, coupled with aggressive price cuts by major players, drove premiums significantly lower.