Lower Spot Copper Prices Can Keep Sellers Reluctant to Sell in Shanghai

SHANGHAI, Mar 20 (SMM) - During the week, the spot premiums in Shanghai rose before falling. Before the delivery last Wednesday, the spot premiums over SHFE 2303 copper contract stabilised at around 90 yuan/mt. On Thursday, those over the SHFE 2304 copper contract were nearly 200 yuan/mt, and fell at the end of the week.

SMM spot premiums of #1 copper cathode stood at 70-120 yuan/mt over the March contract last Friday, and at 90-170 yuan/mt over the April contract as of March 17. In the middle of the week, falling copper prices spurred a surge in downstream purchasing demand, pushing spot premiums higher. According to SMM statistics on Friday, 22,400 mt of social inventory in Shanghai were removed. However, as improving SHFE/LME copper price ratio and strong premiums in the domestic spot market led to import profit, there will be additional inflows of imported copper this week which entered the domestic spot market last Friday from the bonded zone, weighing on intraday prices. Cargoes under warrants offered for sale after delivery will further push sellers to liquidate inventories, and this should weigh on spot quotes. It is expected that spot premiums will unlikely to return to last week's level, and if they fall below zero, the willingness of sellers to sell cargoes will also decrease.