Downstream Demand Remained Weak; Suppliers Waited and Watched the Market [SMM North China Spot Copper]

【SMM Copper Social Inventory Flash】 As of August 17, SMM copper cathode social inventory in China’s major mainstream regions increased 15,900 mt WoW from last Monday to 133,900 mt, up 200 mt compared to the same period last year, with inventory buildup across all regions. Apart from delivery factors, under a pronounced backwardation structure, domestic smelters shipped to delivery warehouses in a concentrated manner, arrivals surged, and coupled with weak consumption amid high copper prices, inventories accumulated at an accelerated pace.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, SMM data showed that social inventory in Shanghai stood at 80,900 mt, up 1,600 mt WoW from last Thursday; social inventory in Jiangsu stood at 23,200 mt, up 7,800 mt MoM, bringing the combined inventory buildup in the two regions to 9,400 mt. The buildup was mainly driven by the return flow of some imports and arrivals of domestic supply, but part of the inventory has been registered as warrants, leaving limited growth in actually available spot cargo. From the perspective of downstream consumption, intraday copper prices touched a high of 110,000 yuan/mt. According to SMM, some downstream processing enterprises had scheduled maintenance shutdowns, orders saw a marked reduction, end-users’ acceptance of the current high copper prices continued to weaken, and procurement was mainly driven by rigid demand. After the contract rollover, under SMM’s price assessment methodology, spot will be officially quoted against the 2609 contract tomorrow. As the contract price spread is expected to normalize after the rollover, spot premiums against the 09 contract are expected to remain at relatively high levels tomorrow, with the premium center moving up sharply versus today’s premiums against the 08 contract. However, attention should be paid to the potential suppression of spot premiums from subsequent warrant outflows—if warrants are released in a concentrated manner, it will create marginal pressure on high premiums.