Copper Prices Pulled Back with Demand Slightly Recovering, Spot Premiums Rebounded Modestly [SMM North China Spot Copper]

According to foreign media reports, the Ecuadorian government announced on May 29 that it would renegotiate the mining contract for the Cascabel copper mine, stating that its terms violated national laws and created an imbalance between the government and the company. The mining concession, located in Imbabura Province, was originally held by Australia's SolGold, and Jiangxi Copper Corporation completed its acquisition for approximately $1.16 billion in March this year. Ecuador's Minister of Energy and Environment stated that if renegotiation was refused, the government would seek another operator. The concession holder ENSA countered that the contract was signed in compliance with regulations and expressed willingness to communicate with the government. Ecuador has issued new minimum parameters for mining contracts, allowing the review or modification of existing contracts, though the previously signed Cangrejos gold mine contract is not subject to renegotiation.

[SMM Shanghai Spot Copper] Copper prices shifted lower during the session, with end-use consumption picking up slightly. According to SMM, downstream buyers mostly placed orders and completed transactions in the range of 105,000-105,500 yuan/mt, with trading conditions improving compared to yesterday. In terms of market structure, the inter-month Contango price spread between futures contracts narrowed slightly to 100-50 yuan/mt. Driven by delivery logic, suppliers strengthened their willingness to hold prices firm, pushing spot discounts to narrow. On the inventory front, SMM data showed that social inventory of copper cathode in Shanghai was recorded at 169,800 mt, down 6,900 mt from June 1, showing a slight destocking trend, mainly due to moderate consumption coupled with reduced arrivals. Overall, under the combined effects of demand stimulated by copper price pullbacks, price spread convergence between futures contracts supporting firm pricing, and destocking, spot prices against the SHFE copper 2606 contract are expected to see discounts narrow further tomorrow.