Macro Factors Weigh on Copper Prices, SHFE Copper Inter-Month Spread Occasionally Sees Backwardation Structure [SMM Shanghai Spot Copper]

SMM June 8:

The SHFE copper 2606 contract opened lower and moved higher in early trading. The opening price was 104,020 yuan/mt. After opening, prices continued to fall, hitting a low of 103,360 yuan/mt. Then prices stabilized and began to rise, touching a high of 104,370 yuan/mt. Afterwards, prices pulled back slightly, with a closing price of 104,150 yuan/mt. The spread between the current and next month contracts ranged from contango 70 yuan/mt to backwardation 30 yuan/mt. The import profit margin for SHFE copper’s front-month contract against the 2606 contract stood at a loss of 530 yuan/mt to a loss of 410 yuan/mt.

During the day, the sales sentiment for copper cathode in Shanghai was 2.81, up 0.09 MoM, and the procurement sentiment was 2.79, up 0.13 MoM. Historical data can be accessed in the database. At the start of early trading, suppliers made initial offers for standard-quality copper at discounts of 50 yuan/mt to 20 yuan/mt. Among them, Xiangguang, Lufang, JCC, SUMIKO-N, etc., were offered at discounts of 30 yuan/mt to 20 yuan/mt; Zhongtiaoshan, Jinchuan ISA, Jinfeng, Zijin, Dajiang HS, etc., at discounts of 50 yuan/mt to 40 yuan/mt; Jinguan, Jinxin, Jintun PC, Jinfeng were offered at a factory delivery discount of 20 yuan/mt. For high-quality copper, Guixi and Jintun Daban were offered at premiums of 30 yuan/mt to 40 yuan/mt. In the second session, suppliers showed strong willingness to hold prices firm, and low-priced cargoes were hard to find in the market. Deals were concluded successively for Jinguan, Jinxin, Jintun PC, Jinfeng, etc., at factory delivery discounts of 40 yuan/mt to 20 yuan/mt. For non-registered copper, due to some suppliers' dumping, discounts edged down, with deals concluded successively at discounts of 270 yuan/mt to 250 yuan/mt.

Looking ahead to tomorrow, last Friday (June 5), the US May non-farm payrolls data significantly exceeded expectations, and March and April non-farm payrolls data were revised up. Market expectations for US Fed rate hikes this year intensified, and the US dollar index moved back above the 100 mark, exerting significant pressure on copper prices. According to SMM, after copper prices declined, end-user dip-buying sentiment picked up, with active price fixing, and orders increased significantly compared to last Friday, boosting overall market trading activity. Suppliers' willingness to sell at low prices weakened, and today's Shanghai spot copper discount narrowed notably from earlier levels. From a delivery perspective, next week is the delivery week for the SHFE copper 2606 contract. As delivery nears, suppliers' willingness to ship to delivery warehouses strengthens, which may further tighten the supply of low-priced available cargoes, supporting the spot discount. The spot discount is expected to continue narrowing ahead of delivery.