Countdown to Delivery: Non-deliverable Cargo Available at Lower Prices, Deliverable Cargo and Warrant Prices Hold Firm [SMM Shanghai Spot Copper]

SMM News on May 14:

       Today, spot #1 copper cathode against the SHFE copper 2505 contract was quoted at discounts of 50 yuan/mt to parity, with an average price at a discount of 25 yuan/mt, down 15 yuan/mt from the previous trading day. The SMM #1 copper cathode price ranged from 78,760 to 79,050 yuan/mt. In the morning session, the SHFE copper 2505 contract mostly traded above 78,800 yuan/mt, reaching a high of 79,060 yuan/mt and closing at 78,940 yuan/mt in the morning. As the delivery date approached, the BACK price spread between futures contracts for the next month widened again to 390-460 yuan/mt, and the import loss for the current month narrowed to within 400 yuan/mt.

       Both purchasing and selling sentiment declined during the day, mainly due to the approaching delivery date. Downstream purchasing sentiment was affected by the high price spread, with purchases generally made after contract rollover. The purchasing sentiment index was 3.07. Suppliers holding registrable warrant cargoes were generally unwilling to sell at low prices. The low-priced copper in the market was mostly imported or non-registrable warrant cargoes. Overall, the willingness to sell was low, and the selling sentiment index dropped to 3.14. During the first trading session, cargoes such as those from Tiefeng and Zhongtiaoshan PC were traded at discounts of around 50 yuan/mt, while those from Xiangguang/JCC were traded at discounts of 40-30 yuan/mt. Subsequently, as the price spread widened and discounts increased, suppliers lowered their quotes, and the transaction price for mainstream standard-quality copper also fell to a discount of 50 yuan/mt. SX-EW cargoes were in short supply, with non-registrable cargoes trading at discounts of around 150 yuan/mt.

       Tomorrow is the last trading day for the SHFE copper 2505 contract. Based on the current spot discounts of around 50 yuan/mt and the BACK price spread of 400 yuan/mt for the next month, spot traders are expected to quote premiums of over 350 yuan/mt against the SHFE copper 2506 contract. With copper prices remaining high, downstream purchasing sentiment has declined somewhat. It is expected that spot prices against the SHFE copper 2506 contract will move downwards after a higher opening.