SMM June 3 update:
The SHFE copper 2606 contract opened lower in the morning session and then consolidated before rebounding. The opening price was 107,000 yuan/mt. After opening, prices quickly moved lower, touching a low of 106,520 yuan/mt, before consolidating and rebounding to a high of 106,990 yuan/mt. Prices pulled back slightly toward the close, with the closing price at 106,920 yuan/mt. The inter-month Contango price spread between futures contracts ranged from 160-100 yuan/mt. The import profit margin for SHFE copper against the 2606 contract ranged from a loss of 800 yuan/mt to a loss of 730 yuan/mt.
Intraday, the selling sentiment for copper cathode in Shanghai was 2.59, down 0.02 MoM, and the purchasing sentiment was 2.53, down 0.02 MoM. Historical data can be found in the database. At the start of the morning session, suppliers offered standard-quality copper at discounts of 100-60 yuan/mt, with Xiangguang, Lufang, and JCC quoting discounts of 60-50 yuan/mt, and Zhongtiaoshan and Yuguang quoting discounts of 100-60 yuan/mt. Suppliers then quickly lowered prices, with Lufang, Xiangguang, and JCC offering discounts of 90-80 yuan/mt; Jinguan, Jinxin, Jintun PC, and Jinfeng quoting ex-factory discounts of 80 yuan/mt; and Zhongtiaoshan, Yuguang, and Zhongjin offering discounts of 120-80 yuan/mt. High-quality copper including Guixi, Jintun (plate), and Jinchuan (plate) was quoted at discounts of 60 yuan/mt to premiums of 20 yuan/mt. Entering the second session, suppliers slightly lowered prices. Jinguan, Jinxin, and Jintun PC were successively traded at ex-factory discounts of 100-80 yuan/mt; Tongguan was successively traded at ex-factory discounts of 60-50 yuan/mt; and non-registered copper was successively traded at discounts of 320-300 yuan/mt.
Intraday, the copper price center shifted upward, and downstream enterprise consumption weakened. According to SMM, Shanghai spot copper remained around 106,500 yuan/mt. End-user cargo pick-up slowed down, and some copper semis processing enterprises in east China planned to shut down furnaces and cut production due to finished product inventories buildup, indicating that the suppression of demand by high prices further intensified. In addition, entering the delivery month, although copper prices remained at a relatively high level, the inter-month Contango price spread between futures contracts held at 160-100 yuan/mt, and suppliers' willingness to ship to delivery warehouse increased. They held prices firm and held back from selling, providing some support for spot discounts. As a result, both selling and purchasing sentiment pulled back intraday, and actual transactions were sluggish. Overall, supported by the widening price spread between futures contracts that encouraged suppliers to hold prices firm, combined with high copper prices suppressing demand, Shanghai spot copper prices against the 2606 contract are expected to remain at a discount tomorrow, with limited room for further downside in discounts.
