Yangshan Copper Premiums Continued to Fall amid Persistent Import Losses

Yangshan copper premiums with a quotation period in April stood at $33-45/mt under warrants during March 27-31, with the average down $9.2/mt from a week earlier. Those stood between $30-50/mt under bill of lading (B/L) with a quotation period in April. As of March 31, the SHFE/LME copper price ratio stood at 7.73.

Yangshan copper premiums continued to fall amid persistent import losses.

In terms of warrants, the shipments leaving warehouses continued to grow during the week, and most of them were under orders placed when the import window was open, scheduled for delivery at the end of March. Orders scheduled for delivery soon were limited due to significant import losses and the weak quotes in China’s domestic spot market. In terms of B/L, sellers lowered premiums for a small amount of cargoes which will be arriving soon to avoid overly high costs due to anticipation of import losses in the near term. Traded import premiums for high-quality pyro-copper currently stand at around $43/mt under warrants, and $35/mt for mainstream pyro-copper. Those for hydro-copper stand at $28/mt. On the B/L front, premiums stand at $45/mt for high-quality copper, $37/mt for mainstream pyro-copper, and $30/mt for hydro-copper. The quotation period is in April.

Recently, the domestic and overseas visible inventories have shown continuous declines, and the LME copper contracts have also turned into a small backwardation structure on the back of low inventory. The contrast of the domestic and overseas copper fundamentals is not obvious. Although it is difficult to see a significant recovery in the import losses in the short term, most of the sources to arrive soon have been purchased by the market.