Downstream Sentiment Cooled, Spot Premiums Stabilized [SMM North China Spot Copper]

In January-February, the value added of industrial enterprises above the designated size increased 6.3% YoY in real terms (all value-added growth rates were real growth rates after deducting price factors). On a MoM basis, in February, the value added of industrial enterprises above the designated size rose 0.83% from the previous month.

[Shanghai Spot Copper] Intraday trading in the spot market improved somewhat from yesterday. Suppliers still showed willingness to hold prices firm, but some suppliers’ sell-offs temporarily weighed on the market, causing spot premiums to decline somewhat in the second trading session. Coupled with the narrowing Contango price spread between nearby futures contracts, suppliers’ willingness to ship to delivery warehouses weakened somewhat, and spot premiums remained under pressure. Demand side, as copper prices fell, downstream enterprises may have had some restocking demand, but the current copper prices had limited actual appeal. Supply side, social inventory remained at a high level, but spot cargo available for actual circulation was relatively tight. Some warrants were already seen flowing out during the day, which may ease some pressure on spot supply. Meanwhile, the import window remained open, and expectations for subsequent inflows of cargo from outside China increased. Overall, amid the tug-of-war between sellers and buyers, Shanghai spot copper is expected to maintain the current discount structure overall tomorrow.