Peru's Energy Crisis Pushes Copper Prices Higher; SHFE Copper Spot Discounts Under Pressure but Approaching Delivery Provides Support [SMM Shanghai Spot Copper]

SMM May 11 update:

During the morning session, SHFE copper 2605 contract moved sideways. The opening price was 107,200 yuan/mt, after which prices edged down, ranging between 106,650 yuan/mt and 107,100 yuan/mt. Copper prices then continued to decline, hitting a low of 106,310 yuan/mt before stabilizing and rebounding, with the closing price at 106,850 yuan/mt. The inter-month Contango price spread between futures contracts ranged from 90 yuan/mt to 30 yuan/mt, and the import profit margin for SHFE copper against the 2605 front-month contract ranged from a loss of 270 yuan/mt to a loss of 190 yuan/mt.

Intraday, the selling sentiment for copper cathode in Shanghai was 2.63, down 0.1 MoM, and the purchasing sentiment was 2.46, down 0.17 MoM. Historical data can be found in the database. At the start of the morning session, suppliers offered standard-quality copper at discounts of 30 yuan/mt to premiums of 30 yuan/mt. In the first round of offers, SPCC-ILO, Lufang, Xiangguang, and JCC were quoted at premiums of 10-30 yuan/mt; Dajiang PC, Jinguan, Zhongtiaoshan, Jinfeng, and Zijin were quoted at discounts of 20 yuan/mt to parity; and Jinchuan ISA Yongchang was quoted at a discount of 30 yuan/mt. Entering the second session, suppliers further lowered prices. High-quality copper Jinchuan (plate) and Jintun plate were quoted at premiums of 20 yuan/mt; ONSAN and Zhongtiaoshan were quoted at discounts of 40 yuan/mt; Lufang, Xiangguang, and JCC were quoted at discounts of 10 yuan/mt; Jinguan, Jintun PC, and Jinxin were traded at discounts of 30-20 yuan/mt on an ex-factory basis; and non-registered copper was traded at discounts of 160-140 yuan/mt.

Looking ahead to tomorrow, Peru's energy crisis has triggered market concerns over copper ore supply, and copper prices surged significantly during the night session. End-users' acceptance of current high copper prices and spot discounts is expected to decline. According to SMM, downstream orders dropped sharply intraday, with purchasing sentiment remaining subdued and dominated by rigid demand. From market performance, suppliers continuously lowered their offers, with spot cargo shifting from premiums to discounts, and the discount margins widened. However, this Friday is the last trading day for the SHFE copper 2605 contract. As delivery approaches, spot discounts are expected to widen under the Contango price spread between futures contracts structure, and suppliers' willingness to ship to delivery warehouse is expected to strengthen. Delivery logic is expected to provide floor support for spot discounts, limiting further downside room.