Premiums for Cargoes with Invoices Dated Next Month Plummet as Demand Continues to Weaken and Transactions Remain Poor [SMM SHFE Spot Copper]

SMM News, December 26:

Today, #1 copper cathode spot prices against the SHFE 2501 contract were quoted at a discount of 10 yuan/mt to a premium of 60 yuan/mt, with an average premium of 25 yuan/mt, down by 50 yuan/mt from the previous trading day. Standard-quality copper transaction prices ranged from 74,180 to 74,260 yuan/mt, while high-quality copper transaction prices ranged from 74,210 to 74,300 yuan/mt. The SHFE copper 2501 contract fluctuated rangebound at 74,200 yuan/mt during the early session and slightly jumped to 74,290 yuan/mt before the morning close. The price spread between the SHFE copper 2501 and 2502 contracts fluctuated from a contango of 30 yuan/mt to a backwardation of 10 yuan/mt.

After entering the trading of cargoes with invoices dated next month, market premiums dropped significantly, and trading activity was sluggish. At the beginning of the session, mainstream standard-quality copper with next-month invoices was quoted at a premium of 40-60 yuan/mt, while high-quality copper such as CCC-P and Jinchuan (plate) with next-month invoices was quoted at a premium of 70-80 yuan/mt. Due to the previously wide-open import arbitrage window, the cost of imported cargoes was relatively low, leading to high pricing flexibility in the market and a continuous decline in premiums. During the mainstream trading period, mainstream standard-quality copper with next-month invoices was quoted at parity to a premium of 20 yuan/mt, with some transactions completed, while high-quality copper with next-month invoices was quoted at a premium of 30-60 yuan/mt, with some transactions completed. Some enterprises, driven by settlement demands, quoted standard-quality copper with next-month invoices at a discount of 10 yuan/mt to parity before the end of the early session, with weak buyer demand.

The oversupply situation in the early market further expanded, spot demand remained weak, and premiums continued to decline rapidly, soon approaching discount levels. With year-end demand from enterprises remaining weak, premiums are expected to decline slightly again tomorrow.