In May, the supply-demand pattern of the sulphuric acid market in many regions of China was adjusted again, with market prices first declining and then rising. In the first half of May, affected by the end of the spring farming season, sulphuric acid prices in many regions of China continued to pull back, with a significant decline particularly in the south China market, while prices in the northern market remained relatively stable overall.

[SMM Analysis: Supply-Demand Pattern Adjusts Again in May, Sulphuric Acid Prices Stop Falling and Rebound in Multiple Regions] The supply-demand pattern of the domestic sulphuric acid market adjusted again in May, with market prices in multiple regions showing a trend of first decline and then rebound. In the first half of May, affected by the end of the spring ploughing peak season, domestic sulphuric acid prices in multiple regions were still in the process of pulling back, with a significant decline especially in the south China market...

In terms of consumption, there is still a lag in the transmission of terminal orders to the upstream sector. Orders for primary processed materials are average. Given the weak demand, it is difficult for spot premiums to improve, and the near-month structure is expected to widen significantly.

[SMM Analysis] It cannot be ignored that the shortage of copper concentrates has gradually been transmitted to copper cathode. In the first half of 2024, there were continuous reports of production cuts and even shutdowns at overseas smelters. This indicates that despite the launch of new smelting and refining projects in the second half of the year (H2), the global supply of copper cathode will not ease.

[SMM Analysis] In May, Shanghai spot copper premiums jumped initially and then pulled back, rapidly retreating after briefly touching premiums above 400 yuan/mt. Before the contract rollover of SHFE copper 2505, due to the mismatch between high open interest and low warrants for the current month, the backwardation structure of the near-month contracts continued to rise to above 500 yuan/mt. After the contract rollover, the price spread between futures contracts naturally shifted to premiums against the SHFE copper 2506 contract, hence presenting a brief period of high premiums. As copper prices remained high after the contract rollover, downstream purchasing sentiment weakened. Coupled with arbitrageurs closing out their profitable positions from the previous structure, spot traders actively sold off their inventory, causing spot premiums to decline.

[SMM Analysis:The Back structure is difficult to sustain ]

[SMM Analysis: Deep B's performance is not enough, while transition to C is not yet complete] SMM believes that the backwardation structure of SHFE will weaken in the future market. The premise of our following discussion is based on the existing tariff levels in the US.