Inventory destocking coupled with demand resilience, Shanghai spot copper premiums strengthen steadily [SMM Shanghai spot copper]

SMM, July 6 –

Today, spot #1 copper cathode against the front-month SHFE copper 2606 contract was quoted at premiums of 40-120 yuan/mt, with an average of 80 yuan/mt, up 10 yuan/mt from the previous trading day. In the morning session, the SHFE copper 2607 contract opened gap-up, then retreated after a rapid rise before stabilizing and rebounding. It opened at 102,980 yuan/mt, then continued to rally to a high of 103,500 yuan/mt, mostly trading between 103,280-103,450 yuan/mt, before quickly falling to a low of 102,910 yuan/mt, then stabilizing and recovering to close around 103,110 yuan/mt. The inter-month spread between the front-month and next-month contracts ranged from a Contango of 70 yuan/mt to a backwardation of 10 yuan/mt, and the import profit margin for SHFE copper against the 2607 contract stood between a loss of 180 yuan/mt and a loss of 90 yuan/mt.

During the day, the sales sentiment for Shanghai copper cathode was 2.95, up 0.04 from the previous session, and the purchasing sentiment was 3.03, up 0.25; historical data can be accessed in the database. In early morning trading, suppliers quoted standard-quality copper at premiums of 40-70 yuan/mt, with brands such as Dajiang PC and Dajiang HS quoted at premiums of 40 yuan/mt, while Lufang, JCC, and Xiangguang were offered at premiums of 60-70 yuan/mt. Subsequently, more offers emerged, with Tiefeng, Jinguan, Jinxin, Zhongjin, Xikuang, and Jinchuan ISA Yongchang etc. quoted at premiums of 40-60 yuan/mt. High-quality copper was scarce and quoted higher, with Jinchuan high-purity and Jintun large-plate etc. at premiums of 100-130 yuan/mt. Registered SX-EW copper such as ESOX and BMKMOOK was offered at parity to premiums of 20 yuan/mt. In the second session, suppliers held prices firm, low-priced cargoes were hard to find, and non-registered copper traded at discounts of 180-160 yuan/mt.

Looking ahead to tomorrow, SMM recorded Shanghai social inventory at 122,400 mt, down 4,100 mt WoW from last Thursday, and Jiangsu social inventory at 36,000 mt, down 200 mt WoW. Consecutive destocking pushed the center of SHFE spot premiums higher. The supply tightness remained unchanged, providing strong support for spot premiums. After low-priced cargoes were quickly absorbed during the day, available spot supply tightened, and suppliers maintained firm offers. Overall, given destocking, supplier price-firming, and resilience in downstream demand, SHFE copper spot premiums against the 2607 contract are expected to stay in premium tomorrow, with the overall center likely edging slightly higher.