Shandong spot copper market

According to SMM statistics, as of July 16, social inventories of copper cathode in major Chinese regions fell to 123,400 mt, down by 16,600 mt from July 13. The recent destocking was mainly due to unplanned maintenance at some smelters, reduced domestic arrivals, and the diversion of overseas supply to the US market, while imported copper remained limited. In the secondary copper market, substitution of copper cathode was weak owing to compliance reviews on invoices. Although demand entered the traditional off-season, with downstream users making just-in-time procurement, the larger contraction in supply is expected to keep inventories low in the short term. Notably, the ratio of cancelled warrants in LME copper inventories has continued to rise recently, and some of the cancelled material has been arranged for shipment to China, indicating that low domestic inventories and tight spot supply are gradually attracting overseas material back. While demand is in the off-season and downstream users are making just-in-time procurement, the supply contraction has been more significant, and inventories are expected to remain low in the short term.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, the current social inventory continues to destock rapidly. SMM data shows that Shanghai's social inventory recorded 76,500 mt, down 9,100 mt MoM; Jiangsu's social inventory recorded 19,500 mt, down 6,900 mt MoM, with available spot cargoes remaining persistently tight. From the perspective of supplier behavior, after low-priced cargoes were quickly digested, the market found it difficult to locate discounted cargoes, and suppliers held firm in their intention to support prices. High-quality copper premiums were maintained at a high of 360-400 yuan/mt. After the contract rollover, the backwardation spread between the front-month and next-month contracts narrowed but still stayed at a relatively high level. Overall, with inventory continuing to destock and limited replenishment arrivals, Shanghai spot copper prices against the SHFE 2608 contract are expected to remain at a premium tomorrow, with the overall center possibly moving slightly higher.