Month-End Trading Thinned Out, Price-Holding Factors Drove Convergence of SHFE Copper Spot Discounts [SMM Shanghai Spot Copper]

SMM, May 29:

Today, SMM #1 copper cathode spot prices were quoted at a discount of 180 yuan/mt to parity against the current-month 2606 contract, with an average discount of 90 yuan/mt. During the morning session, the SHFE copper 2606 contract edged down. The opening price was 105,060 yuan/mt. After the open, prices edged up, touching a high of 105,270 yuan/mt, before gradually declining. By the close, prices fell to 104,820 yuan/mt. The inter-month Contango spread ranged between 150 yuan/mt and 90 yuan/mt. The import profit margin for SHFE copper against the 2606 current-month contract ranged from a loss of 440 yuan/mt to a loss of 340 yuan/mt.

Intraday, the selling sentiment for copper cathode in Shanghai was 2.55, down 0.1 MoM, and the purchasing sentiment was 2.51, down 0.16 MoM. Historical data can be found in the database. At the start of the morning session, suppliers offered standard-quality copper at discounts of 150-120 yuan/mt, with Lufang, Xiangguang, and JCC quoted at discounts of 130-120 yuan/mt, and Zhongtiaoshan, Jinguan, and Jinchuan ISA Yongchang quoted at discounts of 150-140 yuan/mt. Jinguan, Jinxin, Jintun PC, and Jinfeng were quoted at a discount of 120 yuan/mt for cargoes with invoices dated this month with ex-factory pickup. High-quality copper was scarce, with Jinchuan high-purity and Jintun large cathode quoted at a discount of 50 yuan/mt to parity. In the second session, prices saw no significant changes. Non-price-collection brand OLYDA was traded at discounts of 170-160 yuan/mt. Jinguan, Jinxin, and Jintun PC were successively traded at discounts of 130-120 yuan/mt for cargoes with invoices dated this month with ex-factory pickup. Tongguan was successively traded at discounts of 70-60 yuan/mt for cargoes with invoices dated this month with ex-factory pickup. Non-registered copper was successively traded at discounts of 300-280 yuan/mt for cargoes with invoices dated next month.

Looking ahead to next week, Shanghai spot copper discounts are expected to continue narrowing slightly. Intraday, copper prices rose, but the inter-month Contango spread widened slightly. Suppliers showed a strong willingness to hold prices firm, driving spot discounts to narrow slightly. Available cargoes in Changzhou remain tight, which is expected to support local spot prices. However, as month-end approaches, market trading activity is likely to turn sluggish, with downstream purchasing driven mainly by rigid demand and limited willingness to chase higher prices. Overall transactions are expected to be balanced. In summary, under the combined effects of suppliers holding prices firm and sluggish month-end trading, spot Shanghai copper prices against the 2606 contract are expected to remain at a discount next month, with the discount likely to move sideways.