Copper Inventory In Guangdong continued to decline, spot premiums rose

In Guangdong, spot premiums continued to rise last week due to continuously falling inventories and rapid increase in spot premiums in Shanghai. As of last Friday, the spot premiums for high-quality copper rose by 200 yuan/mt from May 12 to 230 yuan/mt, and the premiums for standard-quality copper stood at 200 yuan/mt, up 200 yuan/mt. Hydro-copper was quoted at premiums of 150 yuan/mt, up 230 yuan/mt. Last Friday, the prices in Shanghai exceeded those in Guangdong by 60 yuan/mt. The price gap reached 220 yuan/mt in the middle of the week but fell back immediately.

The price spread was so small last Friday that there was no room for arbitrage between the two regions. As of last Friday, total inventories in Guangdong stood at 40,000 mt, a decline of 7,700 mt from a week earlier. The arrivals in Guangdong fell 8,900 mt to 9,700 mt, lower than the weekly average of 19,000 mt for 2022. Low customs clearance and improved consumption in many regions reduced shipments to Guangdong. Shipments leaving Guangdong warehouses were 17,000 mt last week, a decrease of 2,000 mt compared with the previous week, slightly lower than the weekly average level of 19,500 mt in 2022. The overall consumption in Guangdong was strong last week, and many copper rod enterprises were in full production.

This week, it is understood that the amount of imported copper will increase and smelters will also increase shipments, but the consumption of downstream factories may not be as good as last week. SMM expects supply to grow and demand to weaken this week. And inventory would grow slightly. Spot premiums will fall.

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