Suppliers' Willingness to Sell Increased at Month-End, While Spot Premiums Remained Stable [SMM North China Spot Copper]

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, the Shanghai spot copper market is expected to remain in the doldrums. Demand side, as it is currently month-end, most downstream enterprises have basically completed their monthly procurement plans, with limited new purchasing demand remaining, and the rest mainly focused on picking up goods under long-term contracts. Therefore, there were fewer inquiries during the day and transactions were sluggish. However, on Wednesday this week, as a new monthly procurement cycle begins, coupled with stockpiling demand ahead of the Qingming Festival, downstream buyers with cargo are expected to see some increase in purchasing demand, which may provide temporary support to spot premiums at that time. Supply side, imported cargoes have continued to arrive recently, and the destocking speed of social inventory in Shanghai has slowed down, with overall circulating supply remaining relatively ample, putting some pressure on the room for discount recovery. Overall, spot prices against the SHFE copper 2604 contract are expected to remain at current levels tomorrow, and after mid-week, attention should be paid to whether increased downstream purchasing can drive a slight narrowing of discounts.

[SMM Analysis: The Copper Smelting Industry Faces the Test of Extreme TCs, with Sulphuric Acid and Geopolitics Becoming Key Variables] Since the beginning of this year, the spot market for copper concentrate TCs has shown an unprecedentedly sharp downward trend. The SMM spot copper concentrate index has fallen all the way from -$45/dmt at the start of the year and is now approaching -$70/dmt. Both the speed and magnitude of the decline have been historically rare. So-called negative TCs mean that when smelters purchase copper concentrates, they are not only unable to obtain traditional processing income from miners, but instead must pay fees to the seller. Based on the current TC of -$70/dmt, the cost that smelters actually need to pay to the seller in the copper smelting process is equivalent to a TC of $70, or further converted to a TC+RC of about $112. This extreme price signal has quickly triggered strong market concern over smelter profitability, and has even begun to raise worries about the sustainability of production in China’s copper smelting industry.