Shanghai-Guangdong Price Spread Continues to Widen, Cross-Regional Transfers Expected to Boost East China Spot Premiums [SMM Shanghai Spot Copper]

SMM April 21 update:

During the morning session, SHFE copper 2605 showed a trend of declining, rebounding, and then continuing to edge lower. The opening price was 102,460 yuan/mt. After opening, prices continued to fall, dropping to 102,080 yuan/mt. After stabilizing, prices rebounded to 102,290 yuan/mt, then fluctuated between 102,000 yuan/mt and 102,200 yuan/mt before declining again, hitting a low of 101,880 yuan/mt, with a closing price of 101,950 yuan/mt. The inter-month Contango price spread ranged between 150 yuan/mt and 90 yuan/mt. The import profit margin for SHFE copper against the 2605 contract for the current month ranged from a loss of 160 yuan/mt to a loss of 80 yuan/mt.

Intraday, the selling sentiment for copper cathode in Shanghai was 2.82, up 0.05 MoM, and the purchasing sentiment was 2.74, up 0.04 MoM.. At the start of the morning session, suppliers showed strong wait-and-see sentiment. Standard-quality copper was quoted at parity to a premium of 20 yuan/mt, with Peruvian plates and JCC quoted at a premium of 20 yuan/mt, and Tongguan and Zhongtiaoshan quoted at parity to a premium of 10 yuan/mt. High-quality copper such as Jinchuan (plate) and Jintun plates was quoted at a premium of 20-40 yuan/mt. Subsequently, suppliers quickly lowered prices, with Zhongtiaoshan and Tiefeng quoted at a discount of 30-20 yuan/mt, JCC quoted at parity, and Jinguan, Jinxin, and Jintun PC quoted at ex-factory parity to a premium of 20 yuan/mt. Entering the second session, suppliers further lowered prices, with Jinguan, Jinxin, and Jintun PC successively transacted at ex-factory parity to a premium of 10 yuan/mt.

Outlook for tomorrow: Regional price spread side, the Shanghai-Guangdong price spread widened further from the previous day, reaching 200 yuan/mt, with the theoretical arbitrage window opening. According to SMM, some suppliers have begun relocating cargo from Shanghai warehouses to Guangdong to capture regional price spread gains. If spot premiums in Guangdong continue to remain strong, cross-regional cargo transfers are expected to effectively divert available cargo from the Shanghai market, potentially providing marginal support for local spot discounts and even boosting spot premiums in Shanghai and other regions. Demand side, downstream purchasing sentiment recovered slightly after consecutive declines in copper prices, but overall procurement remained dominated by rigid demand. Overall, supported by the combined effects of cross-regional arbitrage diversion and the price spread between futures contracts structure, Shanghai spot copper against the 2605 contract is expected to remain at a discount tomorrow. Attention should be paid to the transmission effect of Guangdong premiums on the east China market going forward.