On the Fourth Batch of Government Stockpiles of Copper, Zinc and Aluminium

[SMM SHFE Copper Spot] Looking ahead to tomorrow, as delivery approaches, the SHFE copper next-month Back spread has shown signs of marginal convergence, but it remains at a relatively high level overall, and suppliers still have willingness to sell. After spot premiums pulled back rapidly to near parity during the day, some suppliers' willingness to continue selling at low prices has diminished, and sentiment to hold prices firm and hold back from selling is gradually emerging, suggesting that further downside for spot premiums may be quite limited. As of midday, open interest in the SHFE copper 2610 contract stood at approximately 20,000 lots, and SHFE warrants totaled about 9,000 mt. With delivery approaching, attention should still be paid to market fluctuation risks arising from changes in near-month open interest, warrant volumes, and the next-month spread. On the demand side, downstream processing enterprises are still mainly adopting a wait-and-see approach and making just-in-time procurement, with limited willingness to chase higher prices. Overall, if the next-month Back spread continues to converge, pressure on the spot side is expected to ease somewhat. Shanghai spot premiums are expected to stop falling and stabilize tomorrow, with a possibility of a slight rebound.

Antofagasta Minerals’ Centinela copper mine in Chile is scheduled to resume voluntary mediation with the Minera Esperanza and Distrito Centinela unions at 10:00 a.m. local time on October 13 (9:00 p.m. Beijing time) in Antofagasta. The strike began on October 7 and involves 709 workers, or about 22% of the mine’s direct workforce. The unions have warned that if the strike continues into November, the mine’s output that month could be halved. Antofagasta, however, has said its full-year production outlook remains unchanged. The outcome of the mediation will affect the duration of the strike and Centinela’s fourth-quarter production. Labour and operational disruptions are affecting three of Chile’s major copper mines. Centinela’s strike has entered its second week, while the supervisors’ union at BHP’s Escondida remains in government-led mediation. If talks fail, strike action could begin as early as October 14. Separately, Codelco’s El Teniente mine has partially suspended operations following a mudslide that killed two workers.