Rising Copper Prices in February Led to Sufficient Copper Scrap Supply

[SMM Shanghai Spot Copper] Looking ahead to next week, spot premiums in the current Shanghai market have risen to near the year’s highs. As premiums have climbed rapidly for several consecutive sessions, downstream acceptance of high-priced cargo has declined somewhat, and the momentum for spot premiums to rise further is expected to weaken. In terms of supply, according to SMM, some non-registered copper that previously had delayed warehousing due to port congestion is expected to arrive at ports gradually next week, providing some replenishment to available cargo in the Shanghai market. Meanwhile, after the spot price spread between Shanghai and surrounding regions widened, the cross-regional arbitrage window has opened, and some out-of-town cargo is in a position to be transferred to Shanghai, which may marginally ease the tight supply pattern going forward. However, after entering September, a new round of procurement cycles is about to begin. Some downstream players and traders have restocking needs at the beginning of the month. Coupled with the fact that Shanghai market inventory and available cargo remain relatively tight, this provides support to spot premiums on the downside. Overall, with stronger expectations for replenishment from imports and cross-regional cargo, high premiums suppressing chase-buying demand, and early-month procurement demand about to be released, Shanghai spot copper prices against the 2609 contract are expected to remain at elevated premiums next week. There is limited room for the premium center to continue rising sharply, and a pull back slightly cannot be ruled out; overall, the market may consolidate at highs.

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