High Prices Suppress Demand, Shanghai Spot Copper Premiums Continue to Decline [SMM Shanghai Spot Copper]

SMM May 8 update:

During the morning session, SHFE copper 2605 contract exhibited multiple retreat after rapid rise patterns. The opening price was 102,660 yuan/mt, after which prices touched a high of 102,840 yuan/mt, followed by multiple retreats after rapid rises, with a closing price of 102,770 yuan/mt. The inter-month Contango price spread ranged between 60 yuan/mt and 20 yuan/mt, and the import profit margin for SHFE copper against the 2605 contract ranged between a loss of 160 yuan/mt and a loss of 100 yuan/mt.

Intraday, copper cathode buying and selling sentiment in Shanghai rebounded. The selling sentiment was 2.71, up 0.01 MoM, and the buying sentiment was 2.64, up 0.04 MoM. Historical data can be accessed in the database. At the start of the morning session, suppliers offered standard-quality copper at premiums of 40-50 yuan/mt, among which Lufang and Xiangguang quoted premiums of 50 yuan/mt, while Dajiang PC, Zhongtiaoshan, Tiefeng, Jinfeng, Jintong Yusheng, and Yuguang quoted premiums of 40-50 yuan/mt. High-quality copper Jinchuan high-purity was offered at a premium of 110 yuan/mt, and non-registered copper was offered at discounts of 30-40 yuan/mt. Subsequently, suppliers lowered prices, with Zhongjin, Tiefeng, and Yuguang offering premiums of 20-30 yuan/mt, and Jinguan, Jintun PC, and Jinxin offering premiums of 60 yuan/mt. Entering the second trading period, suppliers further lowered prices. Standard-quality copper Jintun PC, Jinguan, and Jinxin actually transacted at premiums of 30-60 yuan/mt, Dajiang PC and Tiefeng quoted premiums of 10-20 yuan/mt, Xiangguang and Lufang quoted premiums of 20-30 yuan/mt, and non-registered copper was transacted at a discount of 60 yuan/mt.

Looking ahead to next week, Shanghai spot copper premiums continued under pressure intraday. Suppliers consecutively lowered their offers throughout the day, with the premium center shifting notably downward, reflecting limited downstream acceptance of high copper prices and premiums, with purchasing driven mainly by rigid demand. In addition, the Shanghai-Guangdong price spread stayed high, with theoretical arbitrage opportunities persisting, which may attract east China cargoes to be diverted to south China, creating a diversion of available cargoes in the Shanghai market and providing some support for local spot discounts. Notably, next Friday is the delivery day for the 05 contract, and delivery logic is gradually emerging, which may provide floor support for spot premiums. Overall, Shanghai spot copper premiums are expected to remain under pressure, but downside room is supported by delivery expectations.