Recovering Macro Sentiment Underpins Copper Prices, SHFE Copper and BC Copper Price Spread Continues Inversion [SMM BC Copper Commentary]

Today, the most-traded BC copper contract 2606 opened at 92,150 yuan/mt. In the early session, the copper price center gradually shifted upward. After the daytime session opened, prices continued to fluctuate upward, reaching 93,470 yuan/mt, then fluctuated downward, touching a low of 92,030 yuan/mt near the close, and ultimately settled at 92,100 yuan/mt, up 0.34%. Open interest stood at 8,580 lots, down 501 lots from the previous trading day, with trading volume at 8,190 lots, indicating bears reducing positions. Macro perspective, US-Iran negotiations approached final progress, with the market anticipating both sides may reach a ceasefire consensus. Combined with oil tankers passing smoothly through the Strait of Hormuz, geopolitical tensions eased significantly, market risk appetite recovered, and a weaker US dollar provided upward support for copper prices. Fundamentals side, market supply circulation remained tight, with insufficient arrivals of both domestic and imported copper, leading to overall tight supply. However, high copper prices suppressed downstream purchasing enthusiasm, with the market mainly engaging in rigid restocking needs. Overall market trading atmosphere was mediocre, and demand-side recovery remained weak. Inventory side, as of Thursday, May 21, SMM copper inventories in major regions nationwide increased 500 mt WoW to 243,800 mt, up 103,900 mt compared to the same period last year (139,900 mt).

SHFE copper 2606 contract closed at 103,940 yuan/mt. Based on the BC copper 2606 contract at 92,100 yuan/mt, its after-tax price was 104,073 yuan/mt. The price spread between SHFE copper 2606 and BC copper was -133, maintaining an inverted spread that widened from the previous day.