Demand for inventory clearance and capital withdrawal remains, with SHFE copper spot premiums experiencing a price collapse [SMM Shanghai spot copper]

SMM News on June 24:

       Today, the spot prices of SMM #1 copper cathode against the SHFE copper 2507 contract for the current month were quoted at parity to a premium of 80 yuan/mt, with an average quoted premium of 40 yuan/mt, down 50 yuan/mt from the previous trading day. The SMM #1 copper cathode price range was 78,320-78,510 yuan/mt. The SHFE copper 2507 contract surged to 78,530 yuan/mt in the early session before declining, touching a low of 78,300 yuan/mt and then rebounding, with the price center continuing to rise. The backwardation (BACK) price spread between futures contracts for the next month fluctuated within 170-200 yuan/mt, and the import loss for SHFE copper for the current month widened to over 1,000 yuan/mt.

       Both purchasing and sales sentiment improved during the day, mainly due to suppliers continuing to clear inventory at low prices, causing premiums to keep falling. Some low-priced supplies were already being sold at a discount. In the early session, suppliers quoted premiums of 70 yuan/mt for mainstream standard-quality copper and 100 yuan/mt for high-quality copper, which then quickly dropped to 40-80 yuan/mt. At this time, market transactions were still in a state of downstream buyers offering low prices. Some suppliers had a need to clear inventory during the day and actively sold off supplies, with transactions for low-priced supplies occurring near parity, which then dropped to a discount of 10 yuan/mt. The overall transaction price center in the market weakened. However, there were fewer non-registered supplies during the day, with transactions occurring at discounts of 70-40 yuan/mt.

       Looking ahead to tomorrow, with the need to clear inventory and capital requirements still present at the end of the quarter, it is expected that spot premiums may continue to fall tomorrow.