Typhoon Impact Expectations Drive Stockpiling Demand Release, Shanghai Spot Copper Premiums Keep Rising [SMM Shanghai Spot Copper]

SMM, July 7:

Today, SMM #1 copper cathode spot prices against the current-month 2606 contract were quoted at premiums of 70-150 yuan/mt, with an average of a premium of 110 yuan/mt, up 30 yuan/mt from the previous trading day. During morning trading, the SHFE copper 2607 contract fell and stabilized before retreating after a rapid rise. It opened at 102,940 yuan/mt, then fell steadily, hitting a low of 102,840 yuan/mt, then surged to a high of 103,180 yuan/mt, and subsequently mostly traded between 103,100-103,120 yuan/mt, before pulling back slightly to close at 102,980 yuan/mt. The price spread between the front month and next-month contracts ranged from a Contango of 50 yuan/mt to a Backwardation of 10 yuan/mt. The import profit margin for SHFE copper against the 2607 contract for the current month was between a loss of 140 yuan/mt and a loss of 50 yuan/mt.

During the day, sales sentiment for copper cathode in Shanghai stood at 2.97, up 0.02 MoM, and procurement sentiment at 3.10, up 0.07 MoM. Historical data can be accessed via the database. Early in the morning session, suppliers first offered standard-quality copper such as Dajiang PC, Zhongjin, Tiefeng, Yuguang, and Dajiang HS at a premium of 50 yuan/mt. They then quickly raised offers. Standard-quality copper brands like Lufang, Xiangguang, and JCC were offered at premiums of 80-90 yuan/mt, while Dajiang PC and Zhongjin were offered at a premium of 70 yuan/mt. High-quality copper, such as Jinchuan high-purity and Jintun large plates, was offered at a premium of 120 yuan/mt. Registered SX-EW copper, including ESOX and BMK, was quoted at premiums of 10-30 yuan/mt. Entering the second session, trading was very active, with few low-priced cargoes available. Non-registered copper was traded at discounts of 190-120 yuan/mt.

Looking ahead to tomorrow, according to the National Meteorological Center, Typhoon Bavi, the 9th typhoon of this year, has strengthened into a super typhoon and is expected to approach the eastern sea areas of China around July 10, with a high probability of making landfall in east China. Affected by this, downstream copper semis processors in Jiangsu and Zhejiang are concerned that the subsequent gales and torrential rain brought by the typhoon may disrupt logistics and production schedules, so they have concentrated their stockpiling purchases in advance, pushing up the overall center of Shanghai spot copper premiums. From the behavior of suppliers, market trading was active, and after low-priced cargoes were quickly absorbed, suppliers showed a stronger willingness to hold prices firm. Overall, driven by the concentrated release of typhoon-related stockpiling demand, suppliers' firm pricing, and the continued destocking of inventories, Shanghai spot copper premiums against the 2607 contract are expected to remain at a premium tomorrow, with the overall center edging up slightly.