Copper sell-off eased on narrower import losses

SHANGHAI, Jun 21 (SMM) — Yangshan copper premiums with a quotation period in July stood at $14-27/mt under warrants during June 15-18, and between $10-26/mt under bill of lading (B/L). The SHFE/LME copper price ratio stood at 7.28 as of June 18.

Market sentiment improved last week. The import window remained closed, but import losses narrowed from 800 yuan/mt early last week to less than 400 yuan/mt at the end of the week. This combined with high quotes in the domestic spot market boosted inquiries. Sell-off eased but supply remained in surplus. Import premiums under B/L continued to fall last week, with $15-18/mt for mainstream pyro-copper slated to arrive at end-June to early July. Market pessimism amid the unfavourable SHFE/LME copper price ratio and sell-off by big sellers at lower prices have lowered import premiums. On warrants, import premiums changed little. The improvement of the LME 0-3 contango structure and the copper price ratio are favourable for sellers. Quotes for regular pyro-copper under warrants stood at around $25/mt last week, and there was room for negotiation. Import premiums under warrants are currently quoted at $15-27/mt, down $1/mt from a week earlier on average, and quotes for B/L stand at $10-23/mt, a decline of $3.5/mt. LME copper inventories saw a substantial delivery on Friday, growing inventories at Rotterdam warehouse in Netherlands  by 25,000 mt. This, together with continued inventory declines in China is expected to improve the SHFE/LME copper price ratio further. Trades are expected to pick up this week and Yangshan copper premiums should step declines.

Traded import premiums for high-quality pyro-copper currently stand at around $27/mt under warrants, $22/mt for mainstream pyro-copper, and $15/mt for hydro-copper. On the B/L front, premiums stand at $23/mt for high-quality copper, $17/mt for mainstream pyro-copper, and $10/mt for hydro-copper. The quotation period is in July.

Copper inventories in the Shanghai bonded zone increased 10,300 mt from June 11 to 429,300 mt as of June 18, growing for the second consecutive week. Shipments arrivals under B/L accounted for the growth. The import window has not opened yet, preventing customs clearances from increasing significantly. This combined with the inflow of shipments arrivals increased bonded zone inventories.