Spot premiums declined in Guangdong amid higher copper prices and quiet spot trading

Last week, spot quotes continued to fall. At the beginning of the week, sellers lowered prices as inventory increased. Downstream buying interest was poor. These, combined with stock liquidation by some sellers, accelerated the decline in premiums. Spot copper traded with discounts from last Thursday. As of last Friday, high-quality copper was quoted with discounts of 10 yuan/mt, down 100 yuan/mt from a week earlier, and standard-quality copper was quoted with discounts of 10 yuan/mt, down 80 yuan/mt. Hydro-copper was quoted with discounts of 60 yuan/mt, down 80 yuan/mt. Last Friday, the prices in Shanghai exceeded those in Guangdong by 130 yuan/mt. The price gap was not large enough for cargo transfer between the two regions. As of last Friday, total inventories in Guangdong stood at 23,700 mt, a decline of 1,800 mt from a week earlier.

Shipments arrivals in Guangdong fell 1,900 mt to 11,700 mt, lower than the weekly average of 19,000 mt for 2022. Arriving shipments of both imported and domestic copper were limited. Shipments leaving warehouses in Guangdong were 15,800 mt last week, an increase of 1,400 mt from the prior week, far below the weekly average level of 19,500 mt for 2022. Most of the shipments were warrants. But SMM understood that the overall consumption last week underperformed from the prior week as large scale plants cut output.

This week, shipments will increase as smelters liquidate inventories at the month-end. Abundant cash at the beginning of August and lower copper prices will spur consumption. SMM expects both supply and demand to increase this week. And inventory would grow slightly. Spot premiums will remain low. Warrants dropped nearly 9,500 mt last week to 11,700 mt, accounting for 49.65% of the total inventory. There will be more warrants being offered for sale if spot copper trades with premiums.