Spot Copper Prices Declined before Rising Last Week

SHANGHAI, Mar 27 (SMM) - Spot premiums in Shanghai fell before rebounding as copper prices bounced back above 69,000 yuan/mt. SMM reported that #1 copper cathode traded with premiums of 90-170 yuan/mt against SHFE 2304 copper contract on March 17, and with premiums of 70-100 yuan/mt over the contract on March 24. At the beginning of last week, due to the impact of the increasing inflows of imported copper on the spot market, traders increased shipments to generate cash, causing spot premiums to plunge. As imported goods were gradually purchased, the spot premiums stabilised.

Traders purchased more cargoes due to concentrated delivery for monthly long-term contracts, and sellers were reluctant to sell at low prices. The spot premiums rose significantly at the end of the week. According to SMM statistics on Friday, 12,400 mt of social inventory was removed from Shanghai, and 7,300 mt was removed from Shanghai bonded zone.

The slowdown in the drop in social inventories was attributable to bonded zone inventories offered for sale. Still, the inventory decline in both social warehouses and bonded zones would expand the backwardation of the SHFE front-month copper contract over the SHFE next-month copper contract.