Shanghai copper premiums fall further on thin trading

Shanghai copper premiums fell further this week on thin trading and weak short-term expectations for the market.

Shanghai copper premiums fell further this week on thin trading and weak short-term expectations for the market.

The most recent assessments and offers were quoted in the range of $65-80 per tonne on an in-warehouse basis in Shanghai on Wednesday March 25, down $5 per tonne from Metal Bulletin sister publication Copper Price Briefing assessment a week ago.

Premiums for ocean cargoes were quoted in the range of $70-85 per tonne, compared with $70-90 per tonne assessed by Copper Price Brief last week.

“Offers these days are mainly at $70-75 per tonne, while bids are about at the $50 level. Few traders would like to sell, except they are really short of cash,” said a Shanghai-based trader.

Some buyers were taking advantage of the weak market to push for lower premiums, she added.

“It’s not the problem of prices now: even if you give low offers, that doesn’t mean there is a buyer. Demand from both end users and the financing side are weak,” said a source with a major trading house.

Further falls are likely and end user demand is unlikely to have improved in March as factories restarted business after the Chinese New Year break later than usual this year, said market participants.

Meanwhile, an unattractive arbitrage between London and Shanghai recently also discouraged transactions,with import loss having reached about 1,900 yuan ($310) per tonne on Wednesday.

The story of Malaysia is another concern to the market, given how many warrant cancellations have happened in the area due to uncertainty surrounding the country’s proposed new goods and services tax.

“Part of the warrants will be transferred to other London Metal Exchange warehouses or will flow into the market, which could add supply pressure,” said an analyst in Shanghai.

Metal Bulletin last week reported that more than 50,000 tonnes of copper were queued to come out of Malaysian warehouses, with the majority of cancelled warrants in Johor.

For those who want to have a clearer idea of Metal Bulletin’s base metal premiums in Asia, please join our webinar for an exclusive discussion on April 2. Click here for the details.

Kiki Kang
kiki.kang@metalbulletinasia.com
Wechat: KikiKang_MB

What to read next
US President Joe Biden will increase tariffs on Chinese imports including steel and aluminium, electric vehicles, semiconductors and advanced batteries, to counteract China’s “unfair” trading practices, he announced on Tuesday May 14
Anglo American's rejection of takeover bids by BHP has put copper firmly under the spotlight, but what challenges lie ahead for the red metal as the corporate tussle continues?
Copper fabricators in China and the wider Southeast Asian region continue to feel the pain of high copper prices on futures exchanges and a lack of new orderbooks, with some having already asked for a postponing of shipments of long-term copper cathodes, sources told Fastmarkets in the week to Wednesday May 15
Recent weeks have seen a significant number of miners agreeing sales of copper concentrate to traders for one to four years of supply, Fastmarkets has learned
The copper market is facing a historical moment with Chinese smelters now paying premiums for raw material copper concentrate while selling their finished product at a discount, but participants point to easing concentrate demand in the second quarter as supportive for the market
The new tariffs on aluminium imports imposed by Mexico are affecting the light metal's supply chain, trade flows and premiums, sources told Fastmarkets during the week to Friday May 3.