High Prices Suppressed Demand, Destocking Pace Slowed Down, Shanghai Spot Copper Spot Discounts Under Pressure [SMM Shanghai Spot Copper]

SMM, April 23:

During the morning session, SHFE copper 2605 moved downwards after a higher opening. The opening price was 103,710 yuan/mt, after which prices touched a high of 103,900 yuan/mt before falling to a low of 102,110 yuan/mt, with a closing price of 102,260 yuan/mt. The inter-month Contango price spread between futures contracts ranged from 180 yuan/mt to 110 yuan/mt, and the import profit margin for SHFE copper against the 2605 contract stood at a loss of 380-300 yuan/mt.

Intraday, copper cathode buying and selling sentiment in Shanghai pulled back significantly. The selling sentiment was 2.57, down 0.25 MoM, and the buying sentiment was 2.56, down 0.15 MoM.. At the start of the morning session, suppliers showed strong wait-and-see sentiment. Standard-quality copper including Jintong PC, Jinfeng, Tiefeng, Honglu, and Jinchuan ISA was quoted at discounts of 10 yuan/mt to premiums of 20 yuan/mt. High-quality copper including Guiye and Jinchuan (plate) was quoted at premiums of 30-60 yuan/mt. Entering the second trading period, suppliers lowered prices. High-quality copper such as Guiye and Jinchuan (plate) was traded at premiums of 10-20 yuan/mt, while Jinguan, Jinxin, and Jintong PC were traded at discounts of 20 yuan/mt to parity on an ex-factory basis. Registered SX-EW copper was scarce, with only some Myanmar-origin cargoes circulating, quoted at a discount of 80 yuan/mt for cargoes with invoices dated next month.

Demand side, SHFE copper prices rose during the night session yesterday, and downstream enterprises' acceptance of current price levels declined notably. Intraday buying sentiment pulled back, reflecting the suppressive effect of high prices on demand. Market structure side, the inter-month Contango price spread between futures contracts widened to 180-110 yuan/mt. Suppliers showed some willingness to hold prices firm, with low willingness to sell, providing some support for spot discounts. Regional supply side, consumption in north China regions such as Gansu, Shanxi, and Henan weakened somewhat, and some smelters resumed shipments to Shanghai. Available cargoes in the east China market may increase going forward, posing potential downward pressure on spot discounts. Inventory side, SMM data showed that social inventory in Shanghai was recorded at 188,000 mt, down 2,800 mt MoM. The destocking pace slowed down notably, as current copper prices held limited appeal for downstream buyers. Overall, amid the interplay between support from the price spread structure and expectations of cargo inflows from the north, Shanghai spot copper prices against the 2605 contract are expected to remain at current levels tomorrow.