High copper prices significantly curb consumption, with spot premiums of SHFE copper plummeting [SMM Shanghai spot copper]

SMM News on July 2:

       Today, SMM reported that spot premiums for #1 copper cathode against the current-month 2507 contract ranged from a premium of 60 yuan/mt to a premium of 180 yuan/mt, with an average premium of 120 yuan/mt, down 80 yuan/mt from the previous trading day. The SMM #1 copper cathode price was 80,870-81,110 yuan/mt. In the morning session, SHFE copper futures rose from 80,630 yuan/mt to briefly touch 80,950 yuan/mt, with the price spread between futures contracts (BACK) fluctuating around 200 yuan/mt.

       During the day, suppliers actively sold their cargoes, and there was a demand for purchasing at lower prices. However, downstream demand was indeed not ideal due to the suppression of high copper prices. There were maintenance activities at copper rod plants in Jiangsu and Zhejiang, leading to sluggish purchasing. Nevertheless, the overall supply in Changzhou was tight, and transactions were better than those in Shanghai. In the early morning session, suppliers quoted premiums of around 150 yuan/mt for standard-quality copper and premiums of 180-200 yuan/mt for high-quality copper, with almost no transactions. Subsequently, premiums were quickly adjusted downward. Entering the main transaction period, Changzhou took the lead in achieving transactions at premiums of around 100 yuan/mt. In Shanghai, the mainstream premiums for standard-quality copper were 80-120 yuan/mt, while imported brands like Jinguang and Zijin had premiums of 60 yuan/mt. As it approached 11 a.m., the mainstream premiums for standard-quality copper were adjusted downward to 60-80 yuan/mt, but only a few suppliers like Xiangguang were quoting at 60 yuan/mt, with other cargoes having premiums of 30-50 yuan/mt.

       Looking ahead to tomorrow, with copper prices surging, consumption is unlikely to improve significantly. It is expected that spot premiums will continue to be suppressed. However, as the price spread between futures contracts has not widened further, there is limited room for spot premiums to decline.