Available Cargo Continued to Tighten, Shanghai Spot Copper Premiums Hit a New High This Year [SMM Shanghai Spot Copper]

SMM News on August 28:

Today, SMM assessed spot premiums for #1 copper cathode against the SHFE copper 2609 contract at 500–570 yuan/mt, with the average at 535 yuan/mt, up 85 yuan/mt from the previous trading day. In early trading, the SHFE copper 2609 contract generally followed a consolidation pattern with a rise. After the open, prices quickly surged above 109,100 yuan/mt; volatility then intensified at highs, with prices briefly pulling back to around 108,950 yuan/mt. Prices subsequently strengthened again, reaching an intraday high near 109,220 yuan/mt. Toward midday, prices continued to consolidate at highs and finally closed at 109,200 yuan/mt. The Back price spread between futures contracts was 330–370 yuan/mt, and the import profit margin for SHFE copper against the 2609 contract (cargoes with invoices dated this month) ranged from a loss of 1,700 yuan/mt to a loss of 1,630 yuan/mt.

Intraday, sales sentiment for copper cathode in Shanghai was 3.1, up 0.13 MoM, while purchasing sentiment was 3.34, down 0.1 MoM; historical data can be queried in the database. Intraday, suppliers’ offers for standard-quality copper (cargoes with invoices dated next month) were at premiums of 500–530 yuan/mt. For cargoes with invoices dated this month, early-session offers at the start of trading were at a premium of 480 yuan/mt, later raised, with deals done at premiums of 540–550 yuan/mt. High-quality copper was scarce, with only some Guixi material available; offers were at a premium of 580 yuan/mt for cargoes with invoices dated next month, with deals done at premiums of 560–580 yuan/mt. Non-registered copper traded at premiums of 400–450 yuan/mt for cargoes with invoices dated next month.

Looking ahead to next week, spot premiums in the Shanghai market have risen to near the year’s highs. As premiums have been lifted rapidly and continuously, downstream acceptance of high-priced cargoes has declined somewhat, and the momentum for further rises in spot premiums is expected to weaken. In terms of supply, SMM learned that some non-registered copper previously delayed from being put into inventory due to port congestion is expected to arrive at ports gradually next week, providing some replenishment to available cargoes in the Shanghai market. Meanwhile, after the spot price spread between Shanghai and surrounding regions widened, the cross-regional arbitrage window has opened, and some out-of-town cargoes are in a position to be shipped to Shanghai, which may marginally ease the tight supply situation going forward. However, after entering September, a new round of procurement cycles is about to begin. Some downstream players and traders have restock demand at the beginning of the month, and with Shanghai market inventory and available cargoes still relatively tight, this will provide support on the downside for spot premiums. Overall, with stronger expectations for replenishment from imports and cross-regional cargoes, high premiums suppressing chase-buying demand, but early-month procurement demand about to be released, spot premiums for Shanghai spot copper against the 2609 contract are expected to remain at high levels next week. The room for the premium center to continue rising sharply is limited; a pull back slightly cannot be ruled out, and the overall market may consolidate at highs.