Imported copper cargoes arriving at Shanghai ports led to a significant inventory buildup, and the SHFE copper market continued to be sluggish. [SMM Shanghai Spot Copper]

SMM February 12:

Today, SMM's #1 copper cathode spot prices against the current month 2602 contract were quoted at a discount of 100-20 yuan/mt, with the average discount at 60 yuan/mt, down 10 yuan/mt from the previous trading day. SMM's #1 copper cathode prices were 101,840-102,240 yuan/mt. In the morning session, the SHFE copper 2602 contract showed a W-shaped pattern, opening at 102,090 yuan/mt. After opening, prices fell to a low of 101,640 yuan/mt, then gradually rebounded from the low, repeatedly testing 102,270 yuan/mt. Subsequently, prices pulled back, dropping to 101,940 yuan/mt before a slight rally. Overall, prices fluctuated between 101,900-102,200 yuan/mt, and by the close, prices rose to 101,950 yuan/mt. The contango spread between nearby contracts ranged from 500-400 yuan/mt. Import profit margins for SHFE copper's current month contract were at a loss of 1,070-960 yuan/mt.

Intraday, both procurement and sales sentiment declined. In the Shanghai region, spot copper sales sentiment was 2.22, down 0.29 WoW, while procurement sentiment was 2.22, down 0.26 WoW. Early in the morning session, suppliers offered standard-quality copper at discounts of 120-40 yuan/mt, and high-quality copper Jinchuan (plate) at discounts of 70-50 yuan/mt. Among these, Dajiang HS and Zhongtiaoshan were quoted at discounts of 120-100 yuan/mt and quickly traded, while Jinguan and Jintun PC were quoted at a discount of 40 yuan/mt. Entering the second session, prices showed little significant change, and actual transactions were sluggish.

Spot premiums/discounts are expected to continue facing downward pressure. Approaching the Chinese New Year holiday, market participation continues to decline, with most suppliers and downstream enterprises gradually entering holiday mode, resulting in sluggish overall trading activity intraday. Supply side, price-ratio locked cargoes secured during the previous open import window are continuously arriving at ports, leading to significant inventory buildup in the Shanghai region intraday. Demand side, due to the approaching holiday, downstream enterprises have generally begun holidays, and procurement demand continues to weaken. Overall, the market is expected to maintain sluggish trading, with spot discounts forecast to widen further tomorrow.