SMM, October 22:
Today, SMM #1 copper cathode spot prices against the SHFE copper 2611 contract were quoted at premiums of 600-820 yuan/mt, with an average premium of 710 yuan/mt, flat from the previous trading day. In early trading, the SHFE copper 2611 contract opened lower and drifted lower. After the open, prices quickly pulled back to around 109,300 yuan/mt, then briefly rebounded to around 109,370 yuan/mt. Copper prices subsequently came under pressure again, with the futures center continuing to shift lower. Despite minor rebounds during the session, upward momentum was limited, and prices broke below 109,000 yuan/mt and 108,900 yuan/mt successively, dipping to around 108,830 yuan/mt near midday, with the morning session closing at around 108,830 yuan/mt. The backwardation spread between next-month and front-month contracts stood at 660-710 yuan/mt, and the import profit margin for SHFE copper against the 2611 contract was at a loss of 440-350 yuan/mt.
During the day, the sales sentiment for copper cathode in Shanghai was 3.13, down 0.02 MoM, and the procurement sentiment was 3.08, down 0.04 MoM. Historical data can be queried in the database. At the start of early trading, suppliers initially quoted standard-quality copper at premiums of 650-750 yuan/mt, and non-registered copper at premiums of 580-600 yuan/mt. Subsequently, suppliers lowered their quotes, with standard-quality copper brands such as Jinguan, Jintun PC, Zhongtiaoshan, and Olyda quoted at premiums of 620-680 yuan/mt, and Honglu quoted at a premium of 550 yuan/mt. High-quality copper supply was scarce, with only some Guixi warrants circulating, quoted at a premium of 800 yuan/mt. In the second session, suppliers further lowered quotes, with some cargoes in Changzhou at premiums of 580-600 yuan/mt, while quotes in Shanghai were largely at a premium of 600 yuan/mt, and non-registered copper was quoted at premiums of 500-550 yuan/mt.
Looking ahead to tomorrow, SMM recorded social inventory in Shanghai at 51,100 mt, down 8,200 mt WoW, and social inventory in Jiangsu at 21,200 mt, down 2,000 mt WoW. Regional inventories continued to destock, reflecting relatively limited arrivals in the market recently. Demand side, some downstream processing enterprises still made just-in-time procurement during the day, but with spot premiums and the backwardation spread between futures contracts both staying at relatively high levels, downstream comprehensive procurement costs remained elevated, limiting their ability to absorb spot cargoes. Supply side, although some domestic cargoes have arrived gradually recently, overall growth has been relatively limited. In addition, due to typhoon weather expectations, some ports reported that vessels have already taken shelter measures, and the pace of imported copper arrivals may be disrupted in the short term, with some cargoes potentially facing delayed arrivals. Overall, low inventory and slow import replenishment are expected to continue supporting spot premiums, but the high premium and high backwardation structure will continue to curb downstream procurement enthusiasm. Spot premiums in Shanghai are expected to continue to consolidate at highs tomorrow, with further upside likely to be relatively limited.
