Social Inventory at Historic Highs, Supply Increases Cause Shanghai Spot Copper Discounts to Continue Widening [SMM Shanghai Spot Copper]

SMM February 26 News:

Today, SMM's #1 copper cathode spot prices against the current month 2603 contract were quoted at a discount of 320-150 yuan/mt, with the average discount at 235 yuan/mt, down 55 yuan/mt from the previous trading day. The SMM #1 copper cathode price ranged from 101,380 to 102,210 yuan/mt. In the morning session, the SHFE copper 2603 contract gradually declined before stabilizing and rebounding. It opened at 102,490 yuan/mt, dropped slightly after opening, then rose, before falling again from 102,550 yuan/mt to a low of 101,650 yuan/mt, after which it began to rise and fluctuated between 102,260 and 102,500 yuan/mt, closing at 102,490 yuan/mt. The contango spread between nearby contracts was between 420 and 350 yuan/mt, while the import profit margin for SHFE copper's current month contract ranged from a loss of 610 to 500 yuan/mt.

Intraday procurement and sales sentiment both rose slightly. The sales sentiment for copper cathode in the Shanghai region was 2.8, up 0.03 WoW, while procurement sentiment was 2.58, also up 0.03 WoW. At the beginning of the morning session, suppliers offered standard-quality copper at a discount of 270-180 yuan/mt, with JCC and Xiangguang quoted at 180-150 yuan/mt, and Zijin and Zhongtiaoshan quoted at 270-210 yuan/mt. High-quality copper from Guixi and Jinchuan (plate) saw firm offers due to scarce supply, quoted at a discount of 100-80 yuan/mt. Entering the second trading period, as market supply increased, suppliers further lowered prices. High-quality copper was offered at a discount of 180-160 yuan/mt, standard-quality copper at 300-240 yuan/mt, with JCC and others concluding transactions at 240-230 yuan/mt, while Jingguan and Tongguan were quoted at 280-250 yuan/mt. Additionally, some low-priced supply was available in the Changzhou region, with Zijin and Dajiang HS quoted at a discount of 340-320 yuan/mt. Registered SX-EW copper supply was tight, with only limited availability such as from Myanmar circulating, quoted at a discount of 360-350 yuan/mt.

Looking ahead to tomorrow, spot discounts for SHFE copper are expected to remain under pressure. Although intraday procurement and sales sentiment rebounded slightly, with some downstream enterprises resuming production and gradually entering the market for inquiries and purchases, the overall market remains constrained by sustained supply increases. From a market structure perspective, the contango spread between nearby contracts maintained within the 420-350 yuan/mt range, and suppliers' willingness to ship to delivery warehouses continues, diverting spot liquidity. Meanwhile, both imported and domestic copper arrivals persist, while downstream operations have not fully resumed, leading to a supply-demand mismatch that continues to drive social inventory buildup. According to SMM, social inventory of copper cathode in major domestic regions continued its post-holiday buildup trend, with the total reaching 531,700 mt, remaining at a historically high level. Additionally, the outflow of unmatched delivery warrants will further pressure spot premiums/discounts. Overall, the market is in the initial stage of post-holiday supply-demand rebalancing, with supply-side pressure dominating. Spot discounts are expected to remain under pressure tomorrow.