Yangshan Copper Premiums Continued to Fall amid Continued Import Losses

SHANGHAI, Feb 27 (SMM) – Yangshan copper premiums with a quotation period in March stood at $15-30/mt under warrants during February 20-24, and between $14-32/mt under bill of lading (B/L) with a quotation period in March. As of February 24, the SHFE/LME copper price ratio stood at 7.78.

Last week, COMEX copper and LME copper rose more sharply on the back of macro news due to extremely low inventories, expanding import losses. The SHFE/LME copper price ratio rallied marginally at the end of the week when LME copper prices dropped. The import losses against SHFE March copper contract stood at 600-1100 yuan/mt last week. This, combined with the lack of improvement in quotes in the domestic spot market, kept purchases of seaborne copper under small orders subdued.

Oversupply weighed down Yangshan copper premiums. Traded import premiums for high-quality pyro-copper currently stand at around $30/mt under warrants, and $25-30/mt for mainstream pyro-copper. Those for hydro-copper stand at $15/mt. On the B/L front, premiums stand at $32-35/mt for high-quality copper, $23-25/mt for mainstream pyro-copper, and $14/mt for hydro-copper.

At present, the domestic social inventory of copper cathode is at a high level, and the downstream demand has not seen a significant improvement. Therefore, the spot discounts will remain in the near term. LME copper inventories have fallen below 64,000 mt. COMEX copper inventory is less than 25,000 mt. In this scenario, the SHFE/LME copper price ratio is unlikely to recover noticeably in the near term, preventing Yangshan copper premiums from rising.