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.

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.

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