Warrant outflows lead to premium decline, with evident sentiment of downstream bargain down purchasing prices [SMM Shanghai spot copper]

SMM News on May 20:

       Today, SMM reported that the spot premiums for #1 copper cathode against the current-month 2506 contract ranged from a premium of 340 yuan/mt to a premium of 440 yuan/mt, with an average premium of 390 yuan/mt, a decrease of 50 yuan/mt from the previous trading day. The SMM #1 copper cathode price was 78,210-78,470 yuan/mt. In the morning session, copper prices briefly touched 78,040 yuan/mt before starting to decline, hovering around 77,960 yuan/mt during the period, and then falling to 77,830 yuan/mt near the morning close. The price spread between futures contracts for the next month continued to decline, and the backwardation structure for distant-month contracts also narrowed.

       In the morning session, suppliers began quoting lower premiums, with mainstream standard-quality copper quoted at around a premium of 400 yuan/mt. Prices in the Shanghai and Changzhou markets for brands such as Tiefeng, Zhongtiaoshan PC, and Jinfeng dropped to around a premium of 350 yuan/mt, and were later driven down to transactions at premiums of 320-340 yuan/mt. At this time, mainstream standard-quality copper was still quoted at premiums of 380-400 yuan/mt, with tight supply. High-quality copper was quoted at around a premium of 420 yuan/mt, mainly for Jinchuan, and CCC-P remained in short supply. Entering the second trading session, some supplies from Japan, South Korea, Dajiang PC, and Dajiang HS were quoted at premiums of 300-320 yuan/mt. The low prices attracted downstream purchases in the market, with the market's daily purchasing sentiment index rising to 3.18 and the sales sentiment index rising to 3.29. Shanghai spot copper traders were concerned about further declines in premiums in the future market and actively sold to lock in profits.

       Tomorrow, it is expected that spot premiums will decline further amid a significant outflow of warrants. However, due to the tight supply of mainstream goods, it is anticipated that some suppliers will still refuse to budge on prices.