Imported Supply Leads Decline in Premiums, Downstream Demand Remains Weak [SMM SHFE Spot Copper]

SMM, December 30:

Today, spot #1 copper cathode was quoted at a discount of 80 yuan/mt to parity against the SHFE 2501 contract, with an average price at a discount of 40 yuan/mt, down 10 yuan/mt from the previous trading day. Standard-quality copper traded at 74,090-74,210 yuan/mt, while high-quality copper traded at 74,110-74,260 yuan/mt. The SHFE copper 2501 contract rose after the opening and then stabilized, climbing from around 74,100 yuan/mt at the beginning of the session to the 74,210 yuan/mt level, and testing 74,280 yuan/mt during the session. The price spread between the SHFE copper 2501 and 2502 contracts fluctuated between a contango of 20 yuan/mt and a backwardation of 10 yuan/mt.

In the early session, premiums continued to decline, and the price spread between domestic and imported copper was significant. At the beginning of the session, mainstream standard-quality copper with invoices dated next month was quoted at a discount of 30-20 yuan/mt, while high-quality copper such as ENM and Jinchuan (plate) was quoted at a discount of 20 yuan/mt to parity, with limited transactions. The price spread between imported and domestic copper was evident, with some imported copper quoted at a discount of 60-50 yuan/mt. During the main trading session, the prices of mainstream standard-quality copper quickly declined, with invoices dated next month quoted at a discount of 60-50 yuan/mt, with limited transactions. High-quality copper with invoices dated next month was quoted at a discount of 40-30 yuan/mt, with some transactions. Imported copper with invoices dated next month was quoted at a discount of 80-60 yuan/mt. By 11 a.m., market prices gradually stabilized, downstream inquiries were not active, and the transaction center stabilized.

Due to favorable SHFE/LME price ratios earlier, importers had a larger cost margin for imports. With significant arrivals over the weekend, some cargoes led the decline in premiums during the early session. According to the SMM survey, outflows from warehouses in areas around Shanghai decreased last weekend. Premiums are expected to decline slightly tomorrow.