Under High Copper Prices, the Price Spread Between Futures Contracts Widens, and Spot Discounts Continue to Narrow Slightly [SMM Shanghai Spot Copper]

SMM February 3:

Today, SMM #1 copper cathode spot prices against the current month 2602 contract were quoted at a discount of 160-80 yuan/mt, with the average discount at 120 yuan/mt, up 10 yuan/mt from the previous trading day. SMM #1 copper cathode prices were 100,520-102,120 yuan/mt. In the morning session, the SHFE copper 2602 contract showed a pattern of gap-up rally followed by a dip and rebound. It opened with a rapid gap-up rally, jumping from around 100,600 yuan/mt to 102,000 yuan/mt, then touched a high of 102,290 yuan/mt before declining to a low of 100,650 yuan/mt, and then rebounded slightly. The closing price was 101,100 yuan/mt. The Contango spread between nearby contracts ranged from 380 yuan/mt to 270 yuan/mt, while the import profit margin for the current month SHFE copper contract ranged from a loss of 920 yuan/mt to 790 yuan/mt.

Intraday sales sentiment improved slightly, while procurement sentiment remained unchanged. The sales sentiment for copper cathode in Shanghai was 2.80, and procurement sentiment was 2.78. At the beginning of the morning session, suppliers showed strong wait-and-see sentiment. High-quality copper Jinchuan (plate) was quoted at a discount of 100 yuan/mt; standard-quality copper was quoted at a discount of 150-110 yuan/mt. Among them, Luzhou Fangyuan, due to scarce supply, was quoted at a discount of 120-110 yuan/mt, while Jinchuan Isa, Zhongjin, Zhongtiaoshan, and Yuguang were quoted at a discount of 150-130 yuan/mt. Subsequently, suppliers adjusted prices, and Zhongtiaoshan quickly traded at a discount of 180-160 yuan/mt. Entering the second session, suppliers showed stronger willingness to hold prices firm. Jinchuan (plate) was quoted at a discount of 100-80 yuan/mt, while JCC, Jinguan, Zhongtiaoshan, and Yuguang were quoted at a discount of 160-110 yuan/mt. Non-registered brands traded successively at a discount of 350-330 yuan/mt.

Looking ahead to tomorrow, the Shanghai spot copper market is expected to remain under pressure. After copper prices declined yesterday, some suppliers in the north chose to deliver to warehouses, coupled with an increase in procurement volume from downstream enterprises, jointly leading to tighter available spot supply in the northern market. Today, some downstream enterprises from Henan and Shandong have turned to the Shanghai market for inquiries, which may provide some regional support to spot prices in east China in the short term. In terms of market structure, some price ratio-related cargoes locked during the previous period when the import window was open are expected to arrive at ports after the holiday, which will increase domestic spot supply pressure. Meanwhile, the Contango spread between nearby contracts widened slightly, and suppliers' willingness to deliver to warehouses persists, which will continue to constrain liquidity in the spot market. If copper prices decline further, although it may stimulate some dip-buying demand, the market is expected to maintain a discount structure tomorrow.