SHFE Copper Trading Nearly Halted Before the Holiday, Faces Import Pressure After the Holiday, Spot Discounts Remain Under Pressure [SMM Shanghai Spot Copper]

SMM February 13 News:

Today, SMM #1 copper cathode spot prices against the front-month 2602 contract ranged from a discount of 50 yuan/mt to a premium of 50 yuan/mt, with the average price at parity, up 60 yuan/mt from the previous trading day; SMM #1 copper cathode prices were 100,050-100,420 yuan/mt. In the morning, the SHFE copper 2602 contract showed an upward trend after a slight decline, opening at 100,160 yuan/mt. After the opening, the price increased, fluctuating between 100,090 yuan/mt and 100,480 yuan/mt, closing at 100,400 yuan/mt. The contango spread for the next month was 500-400 yuan/mt, and the import profit margin for SHFE copper front-month contracts was in a loss of 610-470 yuan/mt.

Intraday buying and selling sentiment both declined, with the sales sentiment for electrolytic copper in Shanghai at 2.15, down 0.07 MoM, and the purchasing sentiment at 2.12, down 0.10 MoM. At the beginning of the morning session, only a few suppliers quoted standard-quality copper Jinguan and Tiefeng at a discount of 50-20 yuan/mt. In the second period, some enterprises had demand for high-quality copper, with suppliers quoting Guixi at a premium of 100-150 yuan/mt. The price of standard-quality copper remained largely unchanged, with some spot orders transacting at higher premiums, but overall, transactions were sluggish.

Looking ahead to the post-holiday period, as the Chinese New Year holiday approaches, market participation continues to decline, with most suppliers and downstream enterprises gradually entering the holiday state, leading to a generally sluggish trading atmosphere. On the supply side, the locked-in price ratio shipments during the earlier open import window are continuously arriving, resulting in a significant inventory buildup in Shanghai. On the demand side, due to the approaching holiday, most downstream enterprises have already taken leave, leading to a continuous weakening of procurement demand. Additionally, February 24 is the last trading day for the SHFE copper 2602 contract, and many suppliers choose to hold their positions over the holiday, waiting for delivery. Some suppliers have already started to quote around parity against the SHFE copper 2603 contract, and it is expected that on the first trading day after the holiday, the spot premiums for SHFE copper will start high and then decline. It is worth noting that although some warrant supplies will be locked by delivery, the imported arrivals before and during the holiday may impact spot transactions. On the first trading day after the holiday, as SMM always quotes against the front-month contract, the spot premiums are expected to be at a high level against the front-month contract, but this is likely to be adjusted on the second trading day. Overall, spot premiums and discounts remain under pressure.