SHANGHAI, Jan 3 (SMM) - The spot premium of the SHFE 2301 copper contract rose by 400 yuan/mt in the week ending December 23, 2022. SMM reported that spot premiums of #1 copper jumped to 570 yuan/mt on December 22.
The closed import window limited the inflows of imported copper. This combined with destocking of social inventories tightened available cargoes. The COVID-19 pandemic 2 hampered the transport of spot copper from north China to Shanghai, preventing the cargoes in Shanghai from being restocked. Moreover, the spread of COVID-19 has significantly muted spot transactions in Shanghai, tightening supply.
However, spot premiums plummeted and moved into discounts last week. SMM reported that spot premiums of #1 copper turned from 535 yuan/mt on December 22 into discounts of 135 yuan/mt on December 28, a drop of 670 yuan/mt, driven by the accumulation of social inventories amid poor consumption. According to SMM statistics, social inventory in Shanghai increased by 16,500 mt to 68,600 mt last week. SMM believes that copper prices climbing to 66,000 yuan/mt during the week suppressed downstream buying interest, and sellers were forced to lower prices to attract buyers. Meanwhile, most of the sellers were depleting inventories ahead of the New Year’s Day holidays. In addition, the wide spread of COVID-19 has kept spot trades in Shanghai quiet.
