Typhoon impacts cargo flows, Back month spread widens, Shanghai spot copper premiums consolidate [SMM Shanghai spot copper]

SMM, August 10:

The SHFE copper 2608 contract showed an overall inverted-V pattern in the morning session. It opened at 107,570 yuan/mt, kept rising after opening, hitting a high of 108,000 yuan/mt during the session, then edged lower to 107,700 yuan/mt, stabilized and rebounded slightly, closing at 107,770 yuan/mt. The backwardation spread between the front-month and next-month contracts ranged from 240 to 310 yuan/mt. The import profit margin for SHFE copper against the 2608 contract stood at a loss of 1,200–1,090 yuan/mt.

During the day, affected by typhoon weather, sales sentiment for copper cathode in Shanghai was 2.71, down 0.48 from the previous trading day, and purchase sentiment was 2.57, down 0.49. Historical data can be checked in the database. In the first round of quotes, suppliers offered standard-quality copper such as Zhongjin, Zhongtiaoshan, and Tiefeng at premiums of 80–90 yuan/mt. Subsequently, they lowered offers, quoting Jinchuan ISA, Tiefeng, Zhongtiaoshan at premiums of 40–50 yuan/mt, and Lufang, JCC, Dajiang large plate at premiums of 60–80 yuan/mt. High-quality copper was scarce, with only some Jintun large plate circulating at a premium of 140 yuan/mt. Entering the second session, trading was sluggish on both sides. Some non-registered copper such as LULIU, TFM, COMMUS was quoted at discounts of 70–60 yuan/mt, and KCC at discounts of 100–90 yuan/mt.

Looking ahead to tomorrow, as typhoon weather affects cargo pick-up and transportation at some warehouses in east China, short-term logistics efficiency will decline, providing some support to the spot market. However, intraday trading was generally sluggish. Affected by weather conditions and high copper prices, downstream purchase willingness fell markedly, with purchases largely need-based. Some processing enterprises in Zhejiang reduced their cargo pick-up arrangements in Shanghai due to transportation disruptions, limiting demand-side support. In terms of inventory, SMM recorded social inventory in Shanghai at 78,300 mt, up 2,200 mt from last Thursday; in Jiangsu, social inventory was 18,100 mt, down 2,400 mt from last Thursday. Overall east China inventory changed little and has yet to reflect notable supply pressure. Meanwhile, the backwardation spread between the front-month and next-month contracts widened to 240–310 yuan/mt, and the spot-to-futures price spread expanded. Some suppliers’ need to roll positions and cash out increased, which may weigh on spot premiums. Overall, under the combined influence of typhoon disruptions to goods flows, a widening backwardation structure, and sluggish market trading, Shanghai spot copper premiums against the SHFE copper 2608 contract are expected to remain at a premium tomorrow, but the overall center may fluctuate slightly. Attention should be paid to cargo pick-up and goods circulation at warehouses after weather conditions improve.