Last week, spot premiums in Guangdong dropped and then rebounded. Spot premiums fell at the beginning of the week due to higher inventories. As sellers raised prices amid falling inventories, spot premiums rose sharply last Thursday and Friday.
As of last Friday, the spot premiums for high-quality copper rose by 110 yuan/mt from May 26 to 320 yuan/mt, and the premiums for standard-quality copper stood at 300 yuan/mt, up 100 yuan/mt from May 26. Hydro-copper was quoted with premiums of 250 yuan/mt, up 110 yuan/mt. Customs clearance volumes were not large last week, and the price spread between hydro-copper and standard-quality copper narrowed. Last Friday, the prices in Guangdong exceeded those in Shanghai by 10 yuan/mt. The price gap was so small that there was no opportunity for cargo transfer between the two regions. As of last Friday, total inventories in Guangdong stood at 33,200 mt, a decline of 1,800 mt from a week earlier.
Arriving shipments remained unchanged at 12,700 mt, still below the weekly average of 19,000 mt for 2022, due to limited arriving shipments of imported copper and domestic copper. The shipments leaving Guangdong warehouses were 14,400 mt last week, an increase of 3,600 mt from the previous week, far below the weekly average level of 19,500 mt for 2022. Downstream buying interest weakened early last week as copper prices continued to rise. Therefore, shipments from Guangdong remained low. However, due to the fewer arrivals, sellers raised prices, and the spot premiums continued to rise.
This week, arrivals of imported copper will increase and the shipments of smelters will also grow. At the beginning of the month, enterprises will have relatively abundant cash flows, and it is expected that consumption will be better than last week. To sum up, SMM expects supply and demand to increase this week, and inventory is likely to fall slightly. The market needs to pay attention to when the warrants will flow to the market. At present, there are still 24,400 mt of warrants in Guangdong, accounting for 73.49% of the total inventory. Spot premiums will remain firm if there are not large quantities of outflows of warrants.
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