After the Chinese New Year, Downstream Purchasing Momentum Remains Weak; Morning Premiums Open High but Decline Later [SMM Shanghai Spot Copper]

Published: Feb 5, 2025 14:01

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[SMM Spot Copper] During the day, mainstream standard-quality copper was quoted at parity to a premium of 40 yuan/mt against the front-month contract, while high-quality copper was quoted at a premium of 20 yuan/mt to 60 yuan/mt. Spot transactions were sluggish during the day, as downstream buyers remained optimistic about post-holiday supply and preferred to rely on holiday orders and in-plant inventory for short-term operations, showing weak willingness to pick up goods. Due to poor transactions, some suppliers significantly adjusted prices to offload cargoes, putting pressure on premiums. As the delivery of the Shanghai Copper 2502 contract approaches after the holiday, the downside room for spot premiums is expected to be limited.

SMM February 5 News: Today, #1 copper cathode spot prices against the SHFE 2502 contract were quoted at parity to a premium of 60 yuan/mt, with an average premium of 30 yuan/mt, up 75 yuan/mt from the previous trading day. Standard-quality copper traded at 75,100–75,440 yuan/mt, while high-quality copper traded at 75,120–75,460 yuan/mt. The SHFE copper 2502 contract jumped initially and then pulled back during the morning session, briefly testing 75,410 yuan/mt before declining and hitting 75,090 yuan/mt by the end of the morning session. The price spread between the SHFE copper 2502 and 2503 contracts fluctuated between a discount of 90 yuan/mt and a discount of 110 yuan/mt.

After the Chinese New Year holiday, the spot market showed signs of recovery. In the early morning, suppliers stood firm on quotes but failed to secure deals, leading to high initial offers that were later lowered. At the start of trading, mainstream standard-quality copper was quoted at premiums of 100–120 yuan/mt, while high-quality copper was quoted at a premium of 150 yuan/mt. Sellers set higher quotes due to expectations of post-holiday consumption recovery. However, end-users showed weak sentiment for picking up goods, as processing enterprises held high in-plant inventories and actual consumption was sluggish. During the main trading hours, premiums quickly declined, with mainstream standard-quality copper trading at premiums of 30–50 yuan/mt and high-quality copper trading at premiums of 50–70 yuan/mt in limited volumes. Hydro copper was scarce and difficult to find quotes for. By 11:00 a.m., spot premiums continued to fall, with mainstream standard-quality copper trading at parity to a premium of 20 yuan/mt and high-quality copper trading at premiums of 20–40 yuan/mt in concentrated transactions.

Spot transactions during the day were mediocre. Downstream players remained optimistic about post-holiday supply and preferred to rely on holiday orders and in-plant inventory for short-term operations, showing weak willingness to pick up goods. Due to poor transactions, some suppliers significantly adjusted prices to offload cargo, putting pressure on premiums. As the SHFE copper 2502 contract approaches delivery, the downside room for spot premiums is expected to be limited.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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