SMM, October 28:
Today, SMM #1 copper cathode spot prices against the SHFE copper 2611 contract were quoted at premiums of 920 yuan/mt to 1,250 yuan/mt, with an average premium of 1,085 yuan/mt, up 145 yuan/mt from the previous trading day. In early trading, the SHFE copper 2611 contract opened higher before consolidating lower. After the open, prices quickly pulled back from around 110,000 yuan/mt to near 109,900 yuan/mt, then rebounded somewhat, with futures fluctuating repeatedly around the 109,950 yuan/mt level. Copper prices subsequently fell under pressure, dipping to an intraday low near 109,770 yuan/mt, before gradually rebounding to around 109,900 yuan/mt. Near midday, prices saw small fluctuations, and the morning session closed at 109,880 yuan/mt. The backwardation spread between the front and next month contracts stood between 560 yuan/mt and 670 yuan/mt, while the import profit margin for SHFE copper against the 2611 contract for the current month ranged from a loss of 1,070 yuan/mt to a loss of 980 yuan/mt.
During the day, selling sentiment for copper cathode in the Shanghai region was 3.07, down 0.08 MoM, while procurement sentiment was 2.79, down 0.18 MoM. Historical data can be queried in the database. In early trading, some low-priced cargoes were quoted at a premium of 850 yuan/mt and were traded very quickly. After that, suppliers generally quoted premiums of 950 yuan/mt to 1,000 yuan/mt. High-quality copper was scarce, with Guixi and Jintun large plates quoted at premiums of 1,200 yuan/mt to 1,300 yuan/mt. In addition, some suppliers were offloading cargoes, quoting Jinguan and others at a premium of 920 yuan/mt. Registered SX-EW copper such as BMK and CLM was quoted at premiums of 840 yuan/mt to 850 yuan/mt. Some low-priced non-registered copper was quoted at a premium of 700 yuan/mt and traded, after which low-priced cargoes became hard to find. Entering the second session, suppliers slightly raised their quotes, with ONSAN, Jintong Yusheng, and others quoted at a premium of 1,000 yuan/mt, and HMG-B quoted at a premium of 1,300 yuan/mt.
Looking ahead to tomorrow, the intraday backwardation spread between the front and next month contracts narrowed slightly from the previous trading day. Combined with persistently tight availability of cargoes in the Shanghai region, suppliers showed a strong inclination to hold prices firm and hold back from selling. After some low-priced cargoes were quickly traded, the center of market quotes shifted further upward. In particular, high-quality copper remained relatively scarce, with quotes staying firm. Demand side, as SHFE copper prices moved higher and spot premiums continued to climb, overall procurement costs for downstream processing enterprises increased further, dampening buying interest somewhat, and overall market trading remained sluggish. Spot premiums in the Shanghai region are expected to stay high tomorrow, with the possibility of edging slightly higher, though caution is warranted regarding the sustained pressure that high copper prices and high premiums may exert on downstream procurement.
