Shanghai-Guangdong Price Spread Widened Again as Overnight Copper Futures Edged Higher [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,084.5/mt, initially declined to a low of $9,056.5/mt, fluctuated widely during the session, and then fluctuated upward to a high of $9,114/mt before closing at $9,111.5/mt, up 0.67%. Trading volume reached 18,000 lots, and open interest stood at 261,000 lots. Overnight, the most-traded SHFE copper 2502 contract opened at 75,020 yuan/mt, hit a high of 75,250 yuan/mt initially, then declined to a low of 74,990 yuan/mt, fluctuated rangebound thereafter, and finally closed at 75,120 yuan/mt, up 0.58%. Trading volume reached 19,000 lots, and open interest stood at 140,000 lots.
【SMM Copper Morning Briefing】News: (1) According to reports, the Palisades Fire, still burning extensively in Los Angeles, California, has become the most destructive wildfire in Los Angeles history, with an estimated 1,100 buildings destroyed.
Spot Market: (1) Shanghai: On January 9, mainstream standard-quality copper premiums against the front-month contract were quoted at 120-140 yuan/mt, and high-quality copper premiums were quoted at 150-170 yuan/mt. Weekly arrivals of imported copper decreased, tightening the supply of circulating cargoes in the Shanghai region. Suppliers held back cargoes with a strong reluctance to sell, and premiums were supported by some rigid demand. However, downstream orders in surrounding areas showed mediocre performance due to rising copper prices. Short-term premiums are expected to remain firm, but weak support from the consumption side may weigh on the market outlook.
(2) Guangdong: On January 9, Guangdong #1 copper cathode spot premiums against the front-month contract were quoted at 480-500 yuan/mt, with an average premium of 490 yuan/mt, up 90 yuan/mt from the previous trading day. Hydro copper premiums were quoted at 330-350 yuan/mt, with an average premium of 340 yuan/mt, up 20 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 75,165 yuan/mt, up 315 yuan/mt from the previous trading day, while hydro copper averaged 75,015 yuan/mt, up 245 yuan/mt. Overall, the scarcity of standard-quality copper in circulation drove premiums significantly higher, but actual transactions were lackluster. Attention should be paid to the impact of imported copper on the market.
(3) Imported Copper: On January 9, warehouse warrant prices were $66-80/mt, QP January, with the average price unchanged from the previous trading day. B/L prices were $58-72/mt, QP February, with the average price up $2/mt from the previous trading day. EQ copper (CIF B/L) was quoted at $6-20/mt, QP February, with the average price unchanged from the previous trading day. Quotes referenced cargoes arriving in mid-to-late January and early February. Early market transactions were more active compared to previous days, as domestic trade premiums continued to rise, slightly lifting the center of mid-to-late January arrival B/Ls. EQ transactions were concentrated around $15/mt. Overall, while buyers and sellers still had differences, the transaction center remained stable.
(4) Secondary Copper: On January 9, secondary copper raw material prices rose by 100 yuan/mt MoM. Guangdong bare bright copper prices were 68,300-68,500 yuan/mt, up 100 yuan/mt from the previous trading day. The price difference between primary metal and scrap was 2,209 yuan/mt, up 429 yuan/mt MoM. The price difference between primary and secondary copper rods was 1,340 yuan/mt. According to the SMM survey, the price differences between primary and scrap, as well as primary and secondary copper rods, continued to widen. Although demand was insufficient due to wire and cable enterprises starting their holidays early, many traders actively picked up goods, expecting to profit from the processing fee difference of secondary copper rods after copper prices pull back before the Chinese New Year.
(5) Inventory: On January 9, LME copper cathode inventory decreased by 1,750 mt to 263,950 mt. SHFE warehouse warrant inventory decreased by 582 mt to 13,367 mt.
Prices: Macro side, global crude oil demand was expected to remain strong due to cold weather in parts of the US and Europe, which boosted winter fuel demand, driving copper prices upward. Additionally, several US Fed officials confirmed on Thursday that the Fed might keep interest rates at current levels for an extended period and would only cut rates again when inflation cools significantly. Focus today is on US non-farm payrolls data, as the December report could provide clearer insights into the current dynamics of the US labour market. Fundamentals side, circulating cargoes in the market were relatively tight, and suppliers showed a strong reluctance to sell. As of Thursday, January 9, SMM copper inventories in major regions across China decreased by 10,100 mt WoW to 105,700 mt, ending a two-week increase. Compared to Monday, inventories in most regions across the country declined. Looking ahead to next week, total supply is expected to increase, but with the Chinese New Year holiday approaching, downstream consumption may decline, and weekly inventories may rise again. Price-wise, copper prices are expected to have limited upside today, with more attention on US non-farm payrolls data.

》Click to view the SMM Metal Database

【The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided is for reference only and does not constitute direct investment research advice. Clients should make prudent decisions and not replace independent judgment with this information. Any decisions made by clients are unrelated to SMM.】