Spot Premiums Hover Around 0 yuan/mt as Rising SHFE Copper Prices Suppress the Consumption

SHANGHAI, Jan 10 (SMM) - On January 10, spot premiums of SMM #1 copper cathode were 0-40 yuan/mt over the SHFE 2301 copper. The average premium was 20 yuan/mt, which remained unchanged from the previous trading day. The traded prices of standard-quality copper were 66,400-66,500 yuan/mt, and the high-quality copper was traded at 66,410-66,520 yuan/mt. In intraday trading, the SHFE 2301 copper lost some of the gains in overnight trading. At the beginning of the session, the prices fluctuated at around 66,600 yuan/mt and once dropped to a low of 66,350 yuan/mt amid pressure from the longs' position cut and the shorts' position increase. Before closing, the prices burgeoned slightly to about 66,500 yuan/mt as the longs increased their positions. At last, the contract closed at 66,470 yuan/mt. The spread between the SHFE 2301 and 2302 copper contracts moved between 20 yuan/mt in the contango structure to 40 yuan/mt in the backwardation structure.

Intraday spot premiums hovered around 0 yuan/mt, and the market trading was slack. Quotes offered by cargo holders stayed unchanged from the previous trading days. Spot prices of mainstream standard-quality were premiums of 20-40 yuan/mt, those of high-quality copper were premiums of about 50 yuan/mt, and those of hydro-copper such as esox stood at discounts of 50 yuan/mt. The spot market witnessed rare inquiries and almost no transactions. At ten o'clock in the morning, the cargo holders slightly reduced their quotes. Prices of mainstream standard-quality copper fell to premiums of 0-10 yuan/mt, those of high-quality copper were premiums of 20-30 yuan/mt, and those of hydro-copper moved between discounts of 80-60 yuan/mt. During the period, some sources of standard-quality copper were quoted at discounts of 10 yuan/mt, which were bought immediately by downstream companies. Afterwards, the spot prices stood at above 0 yuan/mt, and most cargo holders were less willing to ship at discounts.

Copper futures prices edged higher in intraday trading, and the spot market mainly saw cautious purchases. The import losses exceeded 1,000 yuan/mt amid the low SHFE/LME copper price ratio, and the export profits restricted some cargo holders' dumping of goods, hence the spot supply can hardly be ample. SMM believes that the spot premiums will still hover around 0 yuan/mt in the following trading days.