Downstream Consumption Weakens Significantly; Suppliers Slash Prices to Boost Sales [SMM South China Copper Cathode Spot Weekly Review]

This week, premiums and discounts in the region experienced a sharp decline, mainly due to weaker downstream demand and suppliers actively lowering prices to liquidate inventory. As of Thursday, high-quality copper was quoted at a premium of 0 yuan/mt, down 500 yuan/mt WoW; standard-quality copper was quoted at a discount of 100 yuan/mt, down 580 yuan/mt WoW; and hydro copper was quoted at a discount of 160 yuan/mt, down 500 yuan/mt WoW. On Thursday, the Shanghai-Guangdong price spread for standard-quality copper stood at Guangdong being 170 yuan/mt lower, with the price spread being relatively small, resulting in no cross-regional shipments. According to SMM statistics, as of Thursday, total inventory in Guangdong was 8,900 mt, up 3,000 mt WoW. Specifically, weekly arrivals were 13,700 mt, up 2,200 mt WoW, basically flat compared to the annual average level (14,000 mt/week), as the larger Shanghai-Guangdong price spread last week attracted northern supplies, and smelters increased shipments ahead of delivery. Weekly outflows from warehouses were 10,200 mt, down significantly by 4,200 mt WoW, clearly below the annual average level (14,200 mt/week). As the Chinese New Year approaches, more downstream processing enterprises have started their holidays, leading to weaker demand for copper cathode. Looking ahead to next week, as more downstream enterprises go on holiday and the willingness to stockpile for the holiday remains weak, suppliers will have to transfer goods to warehouses, and arrivals are expected to increase. On the downstream consumption side, according to our understanding, some enterprises will start their holidays this weekend, and more will follow in the mid-to-late part of next week. Therefore, we expect a scenario of increasing supply and weakening demand next week, with weekly inventory continuing to rise.

SMM

Downstream Consumption Weakens Significantly; Suppliers Slash Prices to Boost Sales [SMM South China Copper Cathode Spot Weekly Review]

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