Warrant Outflow Expectations Pressure SHFE Copper Premium, Shanghai-Guangdong Price Spread Continues to Widen [SMM Shanghai Spot Copper]

SMM April 17 Update:

During the morning session, SHFE copper 2605 opened lower with a gap and continued to decline before stabilizing and rebounding. The opening price was 102,270 yuan/mt. After opening, prices gapped lower and continued to fall, hitting a low of 101,610 yuan/mt. After stabilizing, prices rebounded to 102,140 yuan/mt before declining again to 101,960 yuan/mt. By the close, prices had risen somewhat, with a closing price of 102,190 yuan/mt. The inter-month Contango price spread between futures contracts ranged from 80 yuan/mt to 50 yuan/mt. The import profit margin for SHFE copper against the 2605 contract for the current month was a loss of 320–260 yuan/mt.

Intraday, the selling sentiment for copper cathode in Shanghai was 2.85, up 0.08 MoM, and the purchasing sentiment was 2.74, up 0.06 MoM.. At the start of the morning session, suppliers showed strong wait-and-see sentiment. Standard-quality copper was quoted at premiums of 50 yuan/mt to parity, with SPCC-ILO, HMG-B, Lufang, and Xiangguang quoted at premiums of 30–40 yuan/mt; Jinguan, Tongguan, Dongnan Tiefeng, Jinfeng, Honglu, and Jinchuan ISA Yongchang quoted at parity to premiums of 20 yuan/mt; registered SX-EW copper Myanmar and BMK quoted at discounts of 20 yuan/mt; high-quality copper Jinchuan (plate) and Guixi quoted at premiums of 60–70 yuan/mt. In the second session, suppliers further lowered prices. Standard-quality copper Xiangguang, JCC, etc. were successively traded at premiums of 10–20 yuan/mt; Jinguan, Jinxin, and Jintun PC were successively traded at ex-factory premiums of 20–30 yuan/mt; high-quality copper Guixi, Jinchuan (plate), and Jintun plate were successively traded at premiums of 50–70 yuan/mt; registered SX-EW copper Myanmar, BMK, and ESOX were quoted at discounts of 40 yuan/mt; non-registered copper was successively traded at discounts of 140–130 yuan/mt.

Outlook for next week: Supply side, some delivery warrants began to flow out intraday, suppressing spot premiums. Market concerns over concentrated warrant releases going forward persist, and suppliers show strong willingness to sell, putting Shanghai spot copper premiums under pressure. Demand side, copper prices saw a slight correction, and downstream procurement was mainly driven by rigid demand, with limited willingness to chase higher prices. Additionally, the intraday price spread between Shanghai and Guangdong spot premiums continued to rise to around 150 yuan/mt. Strong premiums in Guangdong may provide some support to Shanghai market sentiment, but it is difficult to reverse the overall weak supply-demand pattern in the short term. Overall, spot prices against the SHFE copper 2605 contract are expected to remain at current levels next Monday.