Yangshan copper premiums rose before falling

Yangshan copper premiums with a quotation period in October stood at $54-68/mt under bill of lading during September 4-7, with the weekly average up $1/mt from a week earlier. Those stood between $53-65/mt under warrants with a quotation period in September, with the weekly average up $5/mt. The import premiums for EQ (equivalent quality) copper stood at $21-32/mt cif, with a quotation period in October. As of September 7, the SHFE/LME copper price ratio stood at 8.3, and import losses stood at around 527 yuan/mt.

During the week, premiums in Shanghai spot market continued to fall with the average of standard-quality copper down 200 yuan/mt from Monday to 65 yuan/mt as of this Thursday. Yangshan copper premiums surged before falling as consumption was expected to be weak despite the traditional peak season from September to October. In terms of bills of lading, sellers lacked confidence amid domestic continued stock accumulation and falling premiums in China’s domestic spot markets, lowering import premiums at the week's end. Trading under warrants was mixed. At the beginning of the week, some warrants for delivery soon were still attractive to buyers. That, combined with tight supply, bolstered import premiums under warrants. However, quotes under warrants fell along with the premiums in the domestic spot markets as the backwardation of LME September contract over the October contract muted trading.

As of Thursday, import premiums for high-quality pyro-copper stood at around $63/mt under warrants, and $57/mt for mainstream pyro-copper. Those for hydro-copper stood at $50/mt. On the B/L front, premiums stood at $61/mt for high-quality copper, $55/mt for mainstream pyro-copper, and $50/mt for hydro-copper. Import premiums for EQ copper stood at $15-25/mt, cif.

Next week, Customs declarations for imported copper will slide, and shipments from inventories in the domestic bonded zones can hardly grow. These, combined with stockpiling ahead of the National Day holidays, will help premiums in the domestic spot market rebound.