East China inventory drawdown exceeded expectations, strengthening downside support for Shanghai spot copper premiums [SMM Shanghai spot copper]

SMM August 24 news:

Today, SMM #1 copper cathode spot prices against the SHFE copper 2609 contract were quoted at a premium of 150-270 yuan/mt, with an average premium of 210 yuan/mt, down 65 yuan/mt from the previous trading day. The SHFE copper 2609 contract showed a pattern of first falling and then consolidating. After the market opened in the morning session, prices quickly declined, hitting a low of around 107,600 yuan/mt during the session; subsequently, prices repeatedly rebounded, once rising to around 107,860 yuan/mt, but encountered significant resistance on the upside. Approaching midday, prices pulled back again and then rebounded slightly, eventually closing at 107,760 yuan/mt. The overall trading center of gravity in the morning was below the average price line. The inter-month Back spread ranged between 170-220 yuan/mt. The SHFE copper 2609 contract import profit margin ranged from a loss of 1,080 yuan/mt to a loss of 1,000 yuan/mt.

During the day, the sentiment for selling copper cathode in Shanghai was 3.06, down 0.52 WoW, and the sentiment for procurement was 2.93, up 0.35 WoW. Historical data can be queried in the database. In the early morning session, suppliers' first round of quotes for standard-quality copper ranged from a premium of 180-210 yuan/mt, after which suppliers significantly lowered quotes. Brands such as Tiefeng, Zijin, and Zhongtiaoshan quoted premiums of 150-160 yuan/mt, while Jinguan, Jinxin, Jinfeng, and Jintun quoted EXW premiums of 180-190 yuan/mt. High-quality copper was scarce in supply, with only a limited volume of Guixi and Jintun large slabs circulating, quoted at premiums of 300-350 yuan/mt. Registered SX-EW copper was quoted with a premium of 140 yuan/mt by Laos in the early morning, while non-registered copper was quoted at premiums of 100-120 yuan/mt. Entering the second session, suppliers further lowered quotes, with JCC and Lufang trading at premiums of 170-180 yuan/mt.

Looking ahead to tomorrow, SMM recorded social inventory in east China's Shanghai region at 70,800 mt, down 12,300 mt WoW from last Thursday; social inventory in Jiangsu region stood at 16,300 mt, down 4,100 mt WoW from last Thursday. Combined inventory in the two east China regions declined by 16,400 mt, with the destocking magnitude exceeding market expectations. In terms of supply, due to the persistently poor SHFE/LME price ratio, port arrivals of cargo from outside China decreased, coupled with some shipment delays, making the supply supplement from imported copper to the spot market relatively limited. On the demand side, after copper prices experienced a slight correction last week, downstream buyers released some dip-buying demand. Meanwhile, the inter-month Back spread once widened, enhancing suppliers' willingness to sell and accelerating the turnover of market cargo, collectively driving a notable inventory decline. Although procurement sentiment rebounded during the day, standard-quality copper quotes still required consecutive downward adjustments to achieve transactions, reflecting downstream buyers' limited acceptance of the higher premiums. Overall, with east China inventory significantly de-stocked and reduced import arrivals supporting premiums, but downstream buyers still focusing on just-in-time procurement on dips and suppliers' willingness to sell remaining, Shanghai spot copper prices against the SHFE copper 2609 contract are expected to maintain a premium tomorrow. The overall center of gravity may gradually stop falling and stabilize, with relatively limited room for further significant declines.