Inventory Inflection Point Emerged, Suppliers Held Back from Selling, Spot Premiums Rose [SMM Shanghai Spot Copper]

SMM May 6 update:

During the morning session, SHFE copper 2605 opened with a gap up and continued to rise. The opening price was 101,100 yuan/mt. After opening, prices jumped to 102,160 yuan/mt, then edged down to a low of 101,860 yuan/mt before stabilizing and rising again, closing at 102,680 yuan/mt. The inter-month Contango price spread between futures contracts ranged from 90 yuan/mt to 30 yuan/mt. The import profit margin for SHFE copper against the 2605 contract ranged from a profit of 110 yuan/mt to a profit of 240 yuan/mt.

Intraday, both purchase and sales sentiment for copper cathode in Shanghai pulled back. Sales sentiment was 2.64, down 0.02 MoM, and purchase sentiment was 2.49, down 0.22 MoM. Historical data can be accessed in the database. At the start of the morning session, suppliers offered standard-quality copper at premiums of 50-120 yuan/mt, with Lufang and Xiangguang quoted at a premium of 120 yuan/mt, Dajiang PC, Jinguan, Jinfeng, and Tiefeng quoted at premiums of 50-100 yuan/mt. High-quality copper including Guiye, Jinchuan High-Purity, and Jintun Large Plate was offered at premiums of 120-150 yuan/mt. Non-registered copper was traded at parity to a premium of 30 yuan/mt. In the second trading period, market transactions were sluggish. Suppliers lowered prices, with Jintun PC, Jinguan, and Jinxin quoted at 80 yuan/mt for factory pickup, Xiangguang and Lufang quoted at a premium of 100 yuan/mt. Registered SX-EW copper sources were tight, with only some Myanmar-origin material in circulation, quoted at a premium of 30 yuan/mt. Non-registered copper was traded at a discount of 10 yuan/mt.

Looking ahead to tomorrow, inventory side, SMM data shows that social inventory in Shanghai after the holiday was recorded at 188,300 mt, up 6,500 mt WoW, while inventory in Jiangsu was 41,700 mt, down 1,000 mt WoW. The destocking trend saw its first inflection point, shifting to a slight inventory buildup during the holiday period, though the increase was not yet significant. Attention should be paid to the sustainability of subsequent inventory buildup. Supply side, although the import window remains profitable, logistics disruptions in Africa have reduced import arrivals, limiting short-term incremental spot supply. Demand side, after copper prices rose, end-user purchase willingness weakened. Combined with suppliers holding back from selling, spot premiums rose and market trading was thin on both sides. Overall, under the multiple factors of high prices suppressing demand, the initial emergence of an inventory inflection point, suppliers holding back from selling, and reduced import arrivals, Shanghai spot copper prices against the 2605 contract are expected to maintain premiums tomorrow.