Post-holiday inventory buildup combined with high copper prices suppressing demand; spot premiums expected to remain under pressure [SMM Shanghai spot copper]

SMM, October 8:

Today, SMM #1 copper cathode spot prices against the SHFE copper 2610 contract were quoted at premiums of 600-820 yuan/mt, with an average premium of 710 yuan/mt, down 265 yuan/mt from the previous trading day. In early trading, the SHFE copper 2610 contract opened higher with a gap and then rose sharply. After the open, prices climbed rapidly, breaking through 111,200 yuan/mt and then 111,500 yuan/mt. After a brief pullback, prices continued to rise, reaching an intraday high near 111,950 yuan/mt. Copper prices then consolidated at highs in the 111,750-111,900 yuan/mt range, pulling back slightly near midday before closing the morning session at 111,710 yuan/mt. The backwardation spread between the current and next month contracts was 550-760 yuan/mt, and the import profit margin for SHFE copper against the 2610 contract was between a loss of 810 yuan/mt and a loss of 500 yuan/mt.

During the day, the sales sentiment for copper cathode in Shanghai was 2.85, up 0.4 MoM, and the procurement sentiment was 2.78, up 0.37 MoM. Historical data can be queried in the database. At the start of early trading, suppliers initially quoted Lufang, JCC, and other brands at premiums of 800-850 yuan/mt, while Zhongjin, Zijin, Yuguang, and others were quoted at a premium of 750 yuan/mt. Suppliers then lowered quotes slightly, with Lufang, JCC, and others trading at premiums of 750-780 yuan/mt, and Yuguang, Tiefeng, Zhongjin, and others quoted at premiums of 680-700 yuan/mt. Non-registered copper was quoted at premiums of 480-550 yuan/mt. In the second session, suppliers further lowered quotes, with Tiefeng, Xikuang, Dajiang HS, and others trading at premiums of 550-600 yuan/mt, non-registered copper trading at premiums of 470-500 yuan/mt, and high-quality Jintun large plates trading at a premium of 730 yuan/mt.

Looking ahead to tomorrow, SHFE copper prices rose sharply in early trading. End-users and downstream processing enterprises showed further reduced acceptance of the current high copper prices, with new orders yet to show significant volume growth and procurement still driven mainly by rigid demand. On the supply side, SMM recorded social inventory in Shanghai at 54,700 mt, up 5,500 mt from before the holiday. Social inventory in Jiangsu stood at 22,400 mt, up 9,700 mt from before the holiday, mainly due to the arrival of cargoes from some smelters during the National Day holiday. However, imported copper replenishment remained relatively limited, and overall supply pressure was not yet pronounced. Meanwhile, on the first trading day after the holiday, some market participants had not fully returned to work, and enterprise resumption and procurement pace were still in a recovery phase, leaving overall market trading relatively sluggish. In addition, social inventory in Guangdong increased by 11,100 mt from before the holiday, with the regional inventory build relatively pronounced, and the Shanghai-Guangdong spot price spread widened sharply as a result. However, no significant cross-regional cargo transfers or arbitrage activity has been observed in the market so far, and the actual impact on Shanghai spot supply remains relatively limited in the short term. Overall, against the backdrop of post-holiday inventory accumulation, high copper prices suppressing downstream procurement, and market demand not yet fully recovered, spot premiums in Shanghai are expected to remain under pressure and fall tomorrow. Attention should be paid to the actual recovery of orders after downstream enterprises resume work, changes in the Shanghai-Guangdong price spread, and cross-regional cargo flows.