The "price collapse" type of transactions dragged down Shanghai spot copper spot premiums, with further downside room expected tomorrow [SMM Shanghai Spot Copper]

SMM September 9 report:

Today, spot prices of SMM #1 copper cathode against the SHFE copper 2509 contract were at a premium of 20-160 yuan/mt, with the average premium at 90 yuan/mt, down 40 yuan/mt from the previous trading day. SMM #1 copper cathode prices ranged between 79,720-80,060 yuan/mt. At the opening, the SHFE copper 2509 contract surged from 79,620 yuan/mt to 79,920 yuan/mt before retreating to around 79,740 yuan/mt. The inter-month spread stood at BACK30-BACK60 yuan/mt, while import losses for SHFE copper narrowed to around 150 yuan/mt.

Intraday sales sentiment remained high, with imported material suppliers actively offloading cargoes, leading to further declines in premiums. As copper price centers dipped, purchasing sentiment improved slightly. Procurement sentiment for copper cathodes in Shanghai was at 3.17, while sales sentiment stood at 3.21. Imported copper continued to replenish intraday, with Japan and South Korea, CCC-P, and ENM offering at lower prices, causing premiums to slide further in early trading, resulting in a "price collapse" scenario. During the main trading session, Xiangguang, Lufang, and JCC traded at premiums of 60 yuan/mt before being dragged down to around 40 yuan/mt by other low-priced offers. In Changzhou and Shanghai, Jinchuan ISA, Japan and South Korea, OLYDA, Tiefeng, and Zhongtiaoshan PC dropped from premiums of 20 yuan/mt to discounts of 20 yuan/mt. SX-EW copper faced further price pressure, falling to discounts of around 50 yuan/mt, while non-registered materials held relatively firm at discounts of around 100 yuan/mt compared to the previous day.

Looking ahead, imported material remains undigested, but low-priced offers are attracting downstream purchases. High copper prices are expected to trigger strong counteroffers from downstream buyers, with premiums likely to decline further tomorrow. However, warrants remain tight, limiting the potential for deeper discounts on domestic deliverable supplies.