Over a Month of Consecutive Inventory Declines Kept Premiums at High Levels, Expected to Rise Further Next Week [SMM South China Spot Copper Cathode Weekly Review]

SMM April 16 Update:

Guangdong region: Premiums in this region retreated after a rapid rise this week. Before the contract rollover, continuous inventory declines prompted suppliers to actively hold prices firm, driving spot premiums steadily higher. However, the large price spread between futures contracts during the rollover caused premiums to decline again after the rollover. As of Thursday, high-quality copper was quoted at 210 yuan/mt, up 20 yuan/mt WoW Thursday; standard-quality copper premiums were quoted at 130 yuan/mt, up 10 yuan/mt WoW Thursday; SX-EW copper was quoted at 70 yuan/mt, up 10 yuan/mt WoW Thursday. On Thursday, the price spread of standard-quality copper premiums between Shanghai and Guangdong showed Guangdong was 120 yuan/mt higher. The price spread was relatively small, and there was no cross-regional cargo transfer this week. According to SMM statistics, as of Thursday, total warehouse inventory in Guangdong was 23,300 mt, down 11,700 mt WoW Thursday and down 74,000 mt from the annual high. Warrants totaled 10,000 mt, down 7,500 mt WoW Thursday. Specifically: Warehouse arrivals this week were 6,700 mt/week, down 3,200 mt/week WoW, far below the annual average (14,000 mt/week). Arrivals of both imported copper and domestic copper were relatively small this week, mainly due to ongoing maintenance at nearby smelters and increased direct shipments. Warehouse withdrawals were 18,300 mt/week, down 2,400 mt/week WoW, still far above the annual average (14,200 mt/week). Rising copper prices led to a decline in new orders for enterprises, but orders on hand remained substantial, so overall downstream consumption stayed at elevated levels.

Looking ahead to next week, the tight supply situation is unlikely to improve, but demand is expected to weaken due to the sharp rise in copper prices. Therefore, both supply and demand are expected to decline next week, but the decline in demand is expected to be limited. Inventory is expected to continue declining, and spot premiums are expected to continue rising.

(The above information is derived from market research and comprehensive assessment by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and not replace independent judgment with this information. Any decisions made by clients are not related to SMM.)