Supply-demand Rebalancing Continues to Advance SHFE Copper Spot Discounts Gradually Stabilize [SMM Shanghai Spot Copper]

SMM March 3 Report:

In the morning session, SHFE copper 2603 contract showed a "V" shape, opening at 102,350 yuan/mt. After the opening, prices fluctuated between 102,250 yuan/mt and 102,450 yuan/mt, then quickly fell to a low of 101,560 yuan/mt. Prices stabilized and gradually rose, closing at 102,430 yuan/mt. The contango price spread between futures contracts was between 360 yuan/mt and 250 yuan/mt, while the import profit margin for SHFE copper in the current month ranged from a loss of 560 yuan/mt to 370 yuan/mt.

During the day, there were no significant changes in buying and selling sentiment. In Shanghai, the sales sentiment for copper cathode was 2.85, down 0.04 MoM, and the purchasing sentiment was 2.77, up 0.02 MoM. At the beginning of the morning session, suppliers quoted standard-quality copper at a discount of 260 yuan/mt to 120 yuan/mt. Among them, SPCC-ILO, Lufang, Xiangguang, JCC, and SUMIKO-N were quoted at a discount of 190 yuan/mt to 120 yuan/mt, while Zhongtiaoshan, Jinchuan ISA, Zijin, Honglu, and Yuguang were quoted at a discount of 260 yuan/mt to 230 yuan/mt. High-quality copper, such as Guixi and Jinchuan (plate), was quoted at a discount of 100 yuan/mt to 80 yuan/mt. Registered SX-EW copper, ESOX and Myanmar, due to scarce supply, was quoted at a discount of 280 yuan/mt, while non-registered copper was quoted at a discount of 320 yuan/mt. In the second trading period, the price of standard-quality copper stabilized with little change. Tongguan, Jinguan, and Jinxin traded at a discount of 250 yuan/mt to 200 yuan/mt. The price of non-registered copper dropped slightly, trading at a discount of 360 yuan/mt to 350 yuan/mt.

Looking ahead, the spot discounts for SHFE copper are expected to continue to narrow slightly, but the room for improvement is limited. During the second trading period, the premiums and discounts for SHFE spot copper gradually stabilized, with suppliers showing no major adjustments in their quotes. Only the discounts for non-registered copper fell slightly, indicating an increased willingness among suppliers to hold prices firm. Downstream enterprises' acceptance of current prices has gradually improved, and the buying and selling sentiment remains stable. From a market structure perspective, the contango price spread between futures contracts narrowed slightly, which may reduce the willingness of suppliers to ship to delivery warehouses. On the supply side, domestic copper and previously locked-price imported sources continue to arrive, coupled with high social inventory, leading to ample market supply. On the demand side, downstream enterprises are steadily resuming production, and the buying and selling sentiment is improving MoM, but the overall pace of recovery remains slow, making it difficult to provide strong support for premiums and discounts. Overall, the premiums and discounts are slowly recovering, but there are still obstacles to further increases.