Last Trading Day of SHFE Copper 2605 Contract, Shanghai Spot Copper Premiums Remain Under Pressure [SMM Shanghai Spot Copper]

SMM May 15 update:

Today, SMM #1 copper cathode spot prices against the front-month 2605 contract were quoted at a discount of 180 yuan/mt to a discount of 50 yuan/mt, with an average quote at a discount of 115 yuan/mt. Today was the last trading day of the SHFE copper 2605 contract. In accordance with the SMM #1 copper cathode price assessment methodology, SMM consistently quotes against the front-month contract. In the morning session, the SHFE copper 2605 contract largely traded within 105,160-106,100 yuan/mt, while the SHFE copper 2606 contract traded within 106,120-106,200 yuan/mt. The inter-month price spread between futures contracts ranged from Backwardation 20 yuan/mt to Backwardation 140 yuan/mt, and the import profit margin for SHFE copper against the 2606 contract ranged from a loss of 420 yuan/mt to a loss of 190 yuan/mt.

Today, the selling sentiment for copper cathode in Shanghai was 2.6, down 0.02 MoM, while the purchasing sentiment was 2.55, up 0.08 MoM. Historical data can be accessed in the database. At the start of the morning session, suppliers quoted standard-quality copper at a discount of 90 yuan/mt to a discount of 40 yuan/mt, with SPCC-ILO, Lufang, Xiangguang, and JCC quoted at a discount of 50 yuan/mt to a discount of 40 yuan/mt, and ONSAN, Jinfeng, Honglu, and Xikuang quoted at a discount of 90 yuan/mt to a discount of 50 yuan/mt. Jinguan, Jinxin, Jintun PC, and Tongguan quoted ex-factory at a discount of 40 yuan/mt to parity; high-quality copper Jintun large plates were quoted at a discount of 20 yuan/mt. Entering the second trading session, available spot cargo in the market decreased, and suppliers slightly raised prices. Jinguan, Jintun PC, and Jinxin were traded at ex-factory discounts of 60 yuan/mt to 40 yuan/mt, while non-registered copper was traded at discounts of 240 yuan/mt to 200 yuan/mt.

Looking ahead to next week, SHFE copper prices declined today, and downstream orders saw a slight increase in volume. However, current copper prices remain insufficiently attractive to end-users, with the volume increase not being significant and the high-price suppression effect persisting. According to SMM, end-user enterprises mostly placed orders around 102,000-103,000 yuan/mt, and some downstream enterprises have opted for furnace shutdowns and maintenance due to high copper prices, reflecting the notable suppression of actual demand at current price levels. After the contract rollover, the market will officially price around the 2606 contract, and close attention should be paid to the outflow of unmatched warrants. However, the current open interest of the SHFE copper 2605 contract stands at only 4,775 lots, with limited participation in delivery. The concentrated release of warrants is expected to have relatively limited further pressure on spot discounts. Supported by delivery logic, Shanghai spot copper discounts did not see a significant decline. However, if copper prices remain at current highs, the demand side is unlikely to improve effectively, and spot discounts may come under pressure. Overall, Shanghai spot copper prices against the 2606 contract are expected to remain at a discount next week.