SHFE copper market trading sluggish, spot discounts continue to widen [SMM Shanghai spot copper]

SMM Feb. 11:

Today, SMM's #1 copper cathode spot prices against the current month 2602 contract were quoted at a discount of 100 yuan/mt to parity, with the average price at a discount of 50 yuan/mt, down 55 yuan/mt from the previous trading day; SMM's #1 copper cathode price was 101,100-101,530 yuan/mt. In the morning session, the SHFE copper 2602 contract fluctuated rangebound before rising slightly, opening at 101,160 yuan/mt. After opening, the price edged up briefly before quickly testing lower multiple times, fluctuating repeatedly between 101,170 yuan/mt and 101,370 yuan/mt. Subsequently, the price gradually rebounded from the low, reaching a peak of 101,550 yuan/mt, then pulled back to 101,310 yuan/mt before quickly rallying again. By the close, the price rose to 101,630 yuan/mt. The Contango spread between the current and next month contracts ranged from 500 yuan/mt to 400 yuan/mt, while the import profit margin for SHFE copper current month contract ranged from a loss of 910 yuan/mt to 780 yuan/mt.

Intraday sales and purchase sentiment both declined. In the Shanghai region, copper cathode sales sentiment was 2.51, down 0.14 WoW, and purchase sentiment was 2.48, down 0.07 WoW. At the start of the morning session, suppliers offered standard-quality copper at a discount of 100 yuan/mt to parity, while high-quality copper, including Jinchuan (plate) and Guixi, was quoted at a discount of 20 yuan/mt to a premium of 70 yuan/mt. Among these, Xiangguang, Lufang, and Tongguan were quoted at parity and traded quickly, while Dajiang PC and Jinchuan ISA were offered at a discount of 100 yuan/mt. Entering the second session, suppliers slightly adjusted prices, with high-quality copper Jinchuan (plate) and Guixi quoted at a discount of 50 yuan/mt to a premium of 70 yuan/mt, and standard-quality copper, such as Jinguan, Jintun PC, Jinchuan ISA, and Tongguan, offered at a discount of 80 yuan/mt to parity.

Spot premiums/discounts are expected to continue facing downward pressure. Approaching the Chinese New Year holiday, market participation continued to decline, with most suppliers and downstream enterprises gradually entering the holiday period, resulting in relatively sluggish overall trading activity during the day. Supply side, the ratio-fixed cargoes locked in during the previous period when the import window was open are continuously arriving at ports, and the supply of spot copper available in the market is steadily increasing. Demand side, however, weakened further as the holiday approached, with downstream enterprises generally having completed pre-holiday stockpiling, leading to low purchase willingness at this stage and a clear supply-demand weakness pattern in the market. Overall, the market is expected to maintain sluggish trading, with spot discounts forecast to widen further tomorrow.