Copper Prices Pulled Back, Stimulating Downstream Purchasing Enthusiasm; Destocking Accelerated, but Suppliers Sold on Strength, and Spot Premiums Rose First and Then Came Under Pressure [SMM Shanghai Spot Copper]

SMM, March 18:

In early trading, the SHFE copper 2604 contract fell before stabilizing and then fluctuated rangebound. It opened at 96,100 yuan/mt and continued to decline after the open, hitting a low of 95,430 yuan/mt. Prices then stabilized and fluctuated between 95,550 yuan/mt and 95,820 yuan/mt, with the closing price at 95,680 yuan/mt. The backwardation price spread between futures contracts for adjacent months stood between 40 yuan/mt and 80 yuan/mt, while the import profit margin for the SHFE copper front-month contract ranged from a profit of 80 yuan/mt to a profit of 200 yuan/mt.

Intraday, sentiment for copper cathode sales in Shanghai was 3.02, up 0.29 MoM, while purchase willingness was 2.94, up 0.29 MoM. . At the start of early morning trading, as copper prices fell, suppliers showed strong sentiment to hold prices firm. Quotations for standard-quality copper were at discounts of 30 yuan/mt to parity, with some deals for JCC and Lufang concluded at parity; Zhongtiaoshan, Jinguan, Tiefeng, Jinfeng, Zijin, and OLYDA were quoted at discounts of 30 yuan/mt to parity. High-quality copper such as Guixi and Jinchuan (plate) was quoted at premiums of 30 yuan/mt to 50 yuan/mt; non-registered copper was traded at discounts of 60 yuan/mt to 50 yuan/mt. Later, suppliers sharply lowered prices, with standard-quality copper including Xiangguang, JCC, and Lufang quoted at discounts of 40 yuan/mt to 20 yuan/mt, and Tiefeng, Zijin, OLYDA, and Dajiang HS quoted at discounts of 80 yuan/mt to 50 yuan/mt. High-quality copper such as Guixi and Jinchuan (plate) was quoted at discounts of 30 yuan/mt to 10 yuan/mt. Entering the second trading session, suppliers further cut prices, with Lufang, Xiangguang, and JCC quoted at discounts of 70 yuan/mt to 20 yuan/mt, while Tiefeng and OLYDA were successively traded at discounts of 90 yuan/mt to 80 yuan/mt. Registered SX-EW copper cargo was scarce, with only some Myanmar cargo circulating and being successively traded at a discount of 110 yuan/mt.

During the day, the SHFE copper 2604 contract extended its decline, with the trading range further moving down to 95,500-96,000 yuan/mt. The center of copper prices continued to move lower, significantly stimulating downstream enterprises' demand to buy the dip and restock, and trading sentiment in the spot market recovered markedly. On the demand side, according to SMM, most downstream enterprises saw a surge in order volumes, up significantly from the previous period, while end-user enthusiasm for cargo pick-up also increased simultaneously. The pullback in copper prices became more attractive to enterprises, and willingness to buy the dip was strong. Suppliers accordingly held prices firm, driving a clear rebound in spot premiums in early trading. On the supply side, social inventory destocked sharply by 24,200 mt from Monday, and the pace of destocking accelerated. The rebound in spot premiums increased suppliers' willingness to sell, leading to more warrants flowing into the market. As premiums reached the psychological expectations of some suppliers, selling of spot warrants began to emerge, easing the previously tight spot supply situation and dragging spot premiums lower afterward. Overall, current copper prices became more attractive to downstream enterprises, and faster destocking supported spot copper. However, suppliers' selling on price strength, together with changes in the price spread structure between futures contracts, put pressure on premiums. Amid the tug-of-war between sellers and buyers, Shanghai spot copper was expected to remain in a contested pattern tomorrow, with premiums likely to stay in discount territory.