Inventory at Historically Low Levels as Suppliers Stand Firm on Quotes; Spot Premiums Surge Significantly [SMM South China Copper Cathode Spot Weekly Review]

SMM, January 9:

Guangdong Region: This week, premiums in the region showed a significant upward trend, primarily driven by continuous inventory declines and suppliers standing firm on quotes. As of Thursday, high-quality copper was quoted at a premium of 500 yuan/mt, up 350 yuan/mt WoW; standard-quality copper at a premium of 480 yuan/mt, up 380 yuan/mt WoW; and hydro copper at a premium of 340 yuan/mt, up 290 yuan/mt WoW. Towards the end of the week, the inflow of imported copper widened the price spread between standard-quality copper and hydro copper. On Thursday, the Shanghai-Guangdong price spread for standard-quality copper premiums stood at 360 yuan/mt higher in Guangdong, and the significant spread is expected to prompt interregional transfers by the weekend. According to SMM statistics, as of Thursday, Guangdong's total inventory was 6,000 mt, down 4,000 mt WoW. Specifically, this week's arrivals were 11,400 mt/week, down 2,200 mt WoW, significantly below the annual average level (14,000 mt/week). Both imported and domestic copper arrivals were limited this week. Outflows from warehouses reached 14,400 mt/week, up 7,200 mt WoW, slightly above the annual average level (14,200 mt/week). The reduced arrivals led to increased downstream cargo pick-up from warehouses. Additionally, with the start of the new year, enterprises faced less financial pressure, resulting in higher order volumes compared to last week.

Looking ahead to next week, with the approach of delivery, domestic copper arrivals are expected to slightly increase, and the significant Shanghai-Guangdong price spread is likely to boost southbound shipments. On the downstream consumption side, starting mid-January, some downstream enterprises will begin their Chinese New Year holidays, leading to a gradual decline in consumption. Therefore, we expect next week to see a scenario of increased supply and weakened demand, with weekly inventory likely to rise again.

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