[Contract rollover and tight supply drive Shanghai spot copper premiums to a new YTD high after initial dip]

This week, the SHFE copper 2609 contract was delivered. Affected by the high backwardation spread, SHFE spot copper premiums quickly shifted from slight parity at the start of the week to a relatively high level, hitting a new high for the year. At the beginning of the week, after a slight correction in copper prices last week, downstream consumption surged. After active restocking, consumption weakened, and SHFE spot copper premiums basically remained at a slight discount. Subsequently, after the contract rollover, affected by the high backwardation, SHFE spot copper premiums hit a new high for the year. On September 17, SMM recorded social inventory in Shanghai at 58,600 mt, down 2,500 mt WoW from Monday; social inventory in Jiangsu stood at 20,800 mt, up 2,300 mt WoW from Monday, with overall social inventory showing a slight decline.

Looking ahead to next week, the spot market still needs to focus on the arrival pace of imported cargoes and the strength of pre-holiday stockpiling for the two festivals. At the start of this week, the import window briefly opened, stimulating imported cargoes to be priced and flow in. However, it will still take time from vessel arrival, customs clearance, and warehousing to entering the spot market, making it difficult to form a substantial impact in the short term. But if imported cargoes and smelter deliveries are gradually realized, spot supply pressure may emerge in stages. Meanwhile, mainstream standard-quality copper and high-quality copper supply in Shanghai remains relatively tight, with suppliers showing strong willingness to hold prices firm, which still supports spot premiums. On the demand side, copper prices continue to fluctuate at highs, and downstream fear of high prices is gradually emerging. Purchases are mostly based on rigid demand, with weak capacity to absorb high premiums. However, some downstream processing enterprises started stockpiling for the Mid-Autumn Festival and National Day during the week, with purchase willingness rebounding slightly, though its sustainability still needs to be observed. Overall, SHFE spot copper premiums are expected to stay high next week. If imported copper is concentrated into warehouses, there may be a staged pullback. Focus should be on the actual arrival pace of imported copper and changes in downstream stocking sentiment.