Decline in Copper Prices Activates Buying Interest, Spot Discounts Narrow Slightly [SMM Shanghai Spot Copper]

SMM February 2 News:

Today, SMM #1 copper cathode spot prices against the current month 2602 contract were quoted at a discount of 180 yuan/mt to a discount of 80 yuan/mt, with the average price at a discount of 130 yuan/mt, up 20 yuan/mt from the previous trading day; SMM #1 copper cathode prices were 99,880-101,040 yuan/mt. In the morning session, the SHFE copper 2602 contract fell initially and then stabilized at low levels, dropping slightly after opening to a low of 99,500 yuan/mt, then rebounded slightly, fluctuating between 99,900-101,160 yuan/mt, closing at 99,960 yuan/mt. The contango spread between adjacent months ranged from 320 yuan/mt to 160 yuan/mt, while the import profit margin for SHFE copper's current month contract ranged from a loss of 410 yuan/mt to a loss of 260 yuan/mt.

At the start of the morning session, suppliers showed strong wait-and-see sentiment, quoting high-quality copper from Guixi and Jinchuan (plate) at a discount of 100 yuan/mt to a premium of 50 yuan/mt; standard-quality copper was quoted at a discount of 180 yuan/mt to a discount of 100 yuan/mt, with Zijin and Jintong Yusheng quickly traded at a discount of 150 yuan/mt. Subsequently, suppliers lowered their prices, quoting high-quality copper from Guixi and Jinchuan (plate) at a discount of 100 yuan/mt to a discount of 50 yuan/mt, and standard-quality copper at a discount of 150 yuan/mt to a discount of 120 yuan/mt; among them, Lufang, Zhongtiaoshan, and Jintun PC were quoted at a discount of 130 yuan/mt to a discount of 120 yuan/mt. Entering the second session, suppliers further reduced prices, with Lufang quoted at a discount of 140 yuan/mt, and Jinguan, Jintun PC, Zhongtiaoshan, and Yuguang quoted at a discount of 200 yuan/mt to a discount of 180 yuan/mt. Registered SX-EW copper supply was tight, with only some Myanmar-origin material available, so prices remained firm, quoted at a discount of 220 yuan/mt; non-registered material started trading at a discount of 320 yuan/mt.

According to SMM's communication with enterprises, copper prices fell today compared to the previous trading day, leading to a surge in end-user orders; Enterprise 1: When copper prices were high, the daily average order volume was about 300 mt, today's order volume surged about 60% from the previous trading day, indicating strong downstream acceptance of the current price level; Enterprise 2: Some additional spot orders were added today, with today's order volume increasing about 10% from the previous trading day.

Looking ahead to tomorrow, the Shanghai spot copper market is expected to remain under pressure. Today's copper price correction led to increased order volumes compared to the previous trading day, suggesting enhanced attractiveness of current prices for end-user procurement, which may provide some support to spot premiums/discounts. Market structure-wise, SHFE copper import margins turned from loss to profit, prompting importers to actively lock in the SHFE/LME price ratio, thus a significant amount of imported copper is expected to enter the domestic market before the holiday; meanwhile, the contango spread between adjacent months narrowed slightly, encouraging suppliers to increase spot sales, adding to short-term spot supply pressure. If copper prices fall further to lower levels, it may trigger more sustained restocking demand, at which point spot discounts could gradually stabilize.