Sept 20 (LTIT) –SMM expects premiums of spot copper to extend increases through next week on downstream stockpiling ahead of the upcoming week-long National Day holiday amid low copper inventories. 

Lower futures prices of copper alongside stepped-up procurement by traders for the delivery of long-term contracts before September 25 will also drive up spot premiums.

Premiums of SMM #1 copper have climbed in the week to Thursday September 19, standing at 240-280 yuan/mt on Thursday, against the front-month October contract on the Shanghai Futures Exchange. This compared with premiums of 70-100 yuan/mt at the start of this week.

SMM data showed that spot copper premiums typically trend upwards during mid-September over the years. A significant fall in the premiums is expected near the middle of October, when the impact of seasonality fades. 

According to SMM data, overall inventories of copper, including that across social warehouses and in the Shanghai bonded zone, slipped from the second quarter and currently stand at record lows.

Tightened restrictions on scrap imports and limited arrivals of seaborne copper are likely to keep the inventories at lows in the near term.