Spot trades stabilised last week

SHANGHAI, Apr 26 (SMM)—Spot prices in Shanghai remained largely unchanged last week. Spot discounts of standard-quality copper stood at 150-130 yuan/mt, and at 90-70 yuan/mt for high-quality copper. As the price of copper rose from the 68,000 yuan/mt mark to above 69,000 yuan/mt, downstream buyers stood on the sidelines, purchasing as required. Some purchases occurred for long-term contracts delivery early last week. Purchases by traders weakened due to the completion of long-term contracts at the end of the week. Traders refrained from raising prices amid high inventory. Quotes barely changed but traded prices fell towards the low-end of the quotes.
 

Spot quotes in Shandong stabilised last week, with discounts of 200-130 yuan/mt. On Friday, quiet trades lowered overall quotes. A small number of smelters have adjusted their prices slightly in order to generate cash, reducing finished product inventory backlog. Downstream consumption has stabilised. Spot quotes are expected to stem declines this week amid stockpiling ahead of Labour Day holidays by some processing plants.

In north China, spot quotes trended lower last week. Spot copper was quoted with discounts of 340-260 yuan/mt, or an average discount of 300 yuan/mt, on April 16, and was quoted with discounts of 420-360 yuan/mt, or an average discount of 390 yuan/mt on April 23, down 90 yuan/mt. Weak downstream demand amid copper price gains combined with maintenance at copper rod plants accounted for lower spot quotes. However, we expect spot quotes to rise this week amid increased stockpiling for the Labour Day holidays.

In Guangdong, spot quotes fell before rebounding last week. Spot quotes fell early in the week amid higher inventory and rebounded slightly on Friday. As of April 23, spot discounts for high-quality copper fell 30 yuan/mt from April 16 to 100 yuan/mt, and discounts for standard-quality copper stood at 180 yuan/mt, flat from a week earlier. Hydro-copper was quoted with discounts of 230 yuan/mt, flat from a week earlier. On Friday, the price spread between the price spread on standard-quality copper between Shanghai and Guangdong widened 10 yuan/mt to 30 yuan/mt, leaving no opportunities for cargo transfer. As of April 23, total inventories in Guangdong stood at 83,700 mt, an increase of 1,793 mt from April 16, growing for three consecutive weeks. Lesser growth in shipments from warehouses accounted for higher inventory.

Arriving shipments fell sharply by around 10,000 mt to 19,900  mt, slightly above the weekly average of 18,200 mt for 2020, due mainly to sharp declines in arriving shipments of imported copper. Shipments from warehouses decreased 2,300 mt on the week to 17,700 mt, slightly lower than the weekly average of 18,100 mt for 2020. Short-term maintenance at copper rod plants drove weaker consumption last week.

Operating rates at copper rod plants using copper cathode as feedstock have been unstable recently due to short-term maintenance driven by high copper rod inventory. However, arriving shipments are expected to decline this week in view of downstream stockpiling ahead of Labour Day long holidays and exports by some smelters amid export profits. As such, spot quotes expected to inch higher this week.