Delivery Logic Underpins, Shanghai Spot Copper Premiums Narrow Slightly [SMM Shanghai Spot Copper]

SMM, June 5:

In the morning session, the SHFE copper 2606 contract mostly opened lower with a gap and then consolidated sideways. The opening price was 106,290 yuan/mt, then quickly declined to a low of 105,030 yuan/mt, stabilized and edged up to 105,490 yuan/mt, before pulling back again to close at 105,160 yuan/mt. The contango spread between the front-month and next-month contracts was 90–50 yuan/mt, and the import profit margin for SHFE copper against the front-month 2606 contract stood at a loss of 880–750 yuan/mt.

During the day, the sales sentiment index for copper cathode in Shanghai was 2.72, up 0.02 from the previous day, and the purchasing sentiment index was 2.66, up 0.02 from the previous day; historical data is available in the database. Early in the session, suppliers initially quoted standard-quality copper at discounts of 80–60 yuan/mt, with Xiangguang, Lufang, JCC, etc. quoting discounts of 70–60 yuan/mt, and OLYDA, ONSAN, Dajiang-HS, etc. quoting discounts of 80 yuan/mt. Suppliers then quickly lowered prices, with ONSAN, Jinchuan Isa Yongchang, Tiefeng, Zhongtiaoshan, etc. quoting discounts of 100–80 yuan/mt, while Jinguan, Jinxin, Jintun PC, and Jinfeng were quoted at an ex-factory discount of 60 yuan/mt; high-quality copper such as Guixi and Jintun Daban was quoted at premiums of 20–30 yuan/mt. In the second session, suppliers showed strong willingness to hold prices firm, and low-priced cargoes were hard to find. Due to some suppliers offloading cargoes, the discount for non-registered copper edged down, with transactions concluded at discounts of 300–260 yuan/mt.

Supply-demand and consumption side, consumption improved from earlier levels. According to SMM, some suppliers reported that downstream enterprises saw an increase in orders. As delivery approached, the C spread between the front and next contracts narrowed slightly. Supported by delivery logic, suppliers’ willingness to hold prices firm increased, and Shanghai spot copper premiums edged up. In addition, import losses continued to widen, the momentum for overseas cargo inflows weakened, and supply-side increments remained limited. Overall, with support from delivery logic, Shanghai spot copper prices against the 2606 contract are expected to remain at a discount next week, and the discount may narrow slightly.