Low Inventory Support Remains, Shanghai Spot Copper Premiums Consolidate and Pull Back [SMM Shanghai Spot Copper Weekly Review]

This week, the center of Shanghai spot copper premiums consolidated and pulled back. At the start of the week, imported cargoes arrived successively at ports, marginally easing the previous tightness in available supplies. Meanwhile, as month-end approached, the price spread between cargoes with invoices dated this month and next month widened, with some demand to cover this-month invoices providing some support to prices. Mid-week, the pullback in SHFE copper prices led to a slight improvement in downstream bargain-hunting inquiries, and together with month-end invoice demand, spot premiums briefly stabilized. Subsequently, copper prices held up well again, downstream purchasing sentiment cooled, and terminal purchase willingness was mostly concentrated at spot premiums below 200 yuan/mt, with a notable psychological price gap between buyers and sellers. In terms of inventory, SMM data showed that social inventory in Shanghai was 69,500 mt, down 500 mt from this Monday; inventory in Jiangsu was 21,200 mt, down 500 mt from this Monday. Inventory in east China destocked slightly, still providing some support to premiums.

Looking ahead to next week, with the start of a new procurement cycle, the sluggish trading at month-end may improve. Some downstream enterprises have phased restocking needs, and spot procurement volumes may rebound marginally. However, SMM understands that the current psychological price level for terminals is mainly concentrated at SHFE copper 104,500–104,800 yuan/mt. If the futures market stays high, the actual release of procurement volumes will still be limited. On the supply side, earlier imported cargoes have already arrived at ports, and the subsequent arrival growth remains to be seen. Meanwhile, absolute inventory in east China remains low, and combined with the backwardation structure for the next-month contract, this provides support to spot premiums. Overall, it is expected that next week, spot copper prices against the SHFE copper 2608 contract will remain at a premium, and the center of premiums may stop falling and stabilize. If copper prices pull back to around downstream psychological levels, improved spot transactions could push premiums slightly higher.