Price Spread Narrows, Import Losses Widen, Intraday Spot Discounts Continue to Narrow [SMM Shanghai Spot Copper]

SMM March 7 News:

       Today, spot #1 copper cathode premiums and discounts against the SHFE 2503 contract were quoted at a discount of 30 yuan/mt to a premium of 20 yuan/mt, with an average price at a discount of 5 yuan/mt, up 10 yuan/mt from the previous trading day. Standard-quality copper traded at 78,740-78,810 yuan/mt, while high-quality copper traded at 78,770-78,840 yuan/mt. In the early morning session, futures prices rose to around 79,000 yuan/mt. Spot suppliers did not lower premiums and discounts despite the high copper prices. Early quotes for standard-quality copper were at a discount of 30 yuan/mt to parity, while high-quality copper premiums ranged from parity to 20 yuan/mt. Tight supply of Jinchuan and CCC-P brands resulted in no low-priced cargoes, while ENM was quoted near parity. During the main trading session, futures prices slightly retreated to fluctuate rangebound within 78,770-78,820 yuan/mt. Downstream purchasing sentiment was moderate, with most transactions focused on low-priced cargoes. Traders showed strong purchasing interest due to long-term contract requirements. Spot trading remained stable in the morning session, with no downward adjustment in premiums and discounts.

       Observing the price spread structure, the spread between the SHFE copper 2405 and 2406 contracts narrowed, allowing for short-term arbitrage profits. Meanwhile, the backwardation spreads for the SHFE copper 2505-2506 and 2506-2507 contracts continued to widen, enabling partial arbitrage profits. Import losses for SHFE copper in the current month expanded to over 1,000 yuan/mt, which may prompt smelters to increase export intentions.

       Looking ahead to the next trading day, as the market approaches delivery next week, suppliers are expected to maintain firm quotes around parity. However, spot premiums and discounts are unlikely to rise significantly due to the pressure from a large volume of warehouse warrants.