The Market Is Sluggish with Premiums Dropping Sharply; Weak Supply and Demand Lead to Inactive Market [SMM SHFE Spot Copper]

SMM, January 21:

Today, #1 copper cathode spot prices against the SHFE 2502 contract were quoted at a discount of 40 yuan/mt to a premium of 30 yuan/mt, with an average price at a discount of 5 yuan/mt, down 70 yuan/mt from the previous trading day. Standard-quality copper traded at 75,430-75,600 yuan/mt, while high-quality copper traded at 75,470-75,630 yuan/mt. The SHFE copper 2502 contract fluctuated rangebound around 75,500 yuan/mt during the early session and edged up slightly before the session ended. The price spread between the SHFE copper 2502 and 2503 contracts fluctuated at C140-C170 yuan/mt.

Spot premiums dropped significantly in the early market as weak consumption prompted suppliers to clear inventories. At the beginning of the session, mainstream standard-quality copper was quoted at a premium of 10-30 yuan/mt, while high-quality copper, such as CCC-P and Jinchuan (plate), was quoted at a premium of 40-60 yuan/mt. Due to halted logistics, downstream consumption remained sluggish. Suppliers actively sold at lower prices, putting pressure on premiums. During the main trading session, mainstream standard-quality copper was traded at a discount of 20 yuan/mt to parity, while high-quality copper was traded at a premium of 20-30 yuan/mt. Hydro copper was in tight supply, with few offers available. By 11:00 a.m., market premiums continued to decline, with mainstream standard-quality copper traded at a discount of 40-30 yuan/mt and high-quality copper traded at parity to a premium of 20 yuan/mt.

Spot premiums dropped significantly during the day as spot consumption remained weak ahead of the Chinese New Year. Downstream operating rates continued to decline, but considering the widening price spread structure, which reduced holding costs, the downside room for premiums is expected to be limited.