SMM May 14 update:
Today, SMM #1 copper cathode spot prices against the front-month 2605 contract were quoted at a discount of 80 yuan/mt to a discount of 20 yuan/mt, with an average discount of 50 yuan/mt, down 15 yuan/mt from the previous trading day. SMM #1 copper cathode prices were 107,020-107,740 yuan/mt. In the morning session, SHFE copper 2605 opened lower with a gap and then moved sideways before continuing to decline. The opening price was 108,630 yuan/mt. After the gap-down opening, prices continued to fall, reaching a low of 107,030 yuan/mt. Prices then fluctuated between 107,030 yuan/mt and 107,800 yuan/mt before copper prices continued to decline, hitting a low of 106,620 yuan/mt, with a closing price of 108,440 yuan/mt. The price spread between futures contracts ranged from Contango 70 yuan/mt to Backwardation 60 yuan/mt. The import profit margin for SHFE copper against the 2605 front-month contract ranged from a loss of 440 yuan/mt to a loss of 260 yuan/mt.
During the day, the selling sentiment for copper cathode in Shanghai was 2.62, up 0.03 MoM, and the purchasing sentiment was 2.47, up 0.07 MoM. Historical data can be found in the database. At the start of the morning session, suppliers quoted standard-quality copper at a discount of 80 yuan/mt to a discount of 20 yuan/mt, with Lufang, Xiangguang, and JCC quoted at a discount of 40 yuan/mt to a discount of 20 yuan/mt, and ONSAN, Dajiang PC, Jinguan, Zhongtiaoshan, and Jinfeng quoted at a discount of 80 yuan/mt to a discount of 50 yuan/mt. Jinguan, Jinxin, Jintun PC, and Tongguan were quoted at a discount of 30 yuan/mt to parity for warehouse pickup. High-quality copper Jintun (plate) and Jinchuan (plate) were quoted at a discount of 20 yuan/mt to a discount of 10 yuan/mt. Registered SX-EW copper Myanmar and MOOK were quoted at a discount of 130 yuan/mt. In addition, some suppliers had already chosen to quote against the SHFE copper 2606 contract during the day, with JNMC quoted at a discount of 20 yuan/mt and Jinguan at a discount of 50 yuan/mt. Entering the second session, suppliers further lowered prices. Jinguan, Jintun PC, and Jinxin were transacted at a discount of 70 yuan/mt to a discount of 30 yuan/mt for warehouse pickup, and unregistered copper was transacted at a discount of 240 yuan/mt to a discount of 200 yuan/mt.
Looking ahead to tomorrow, tomorrow is the last trading day for the SHFE copper 2605 contract. According to the SMM #1 copper cathode price assessment methodology, SMM always quotes against the front-month contract. From the current market structure, SHFE copper prices dropped rapidly during the day with the price spread between futures contracts ranging from Contango 70 yuan/mt to Backwardation 60 yuan/mt. End-user procurement orders saw a slight increase in volume, but not significantly. According to SMM, some downstream enterprises placed orders around 104,000 yuan/mt. Downstream purchasing sentiment remained relatively subdued, and the suppressive effect of high copper prices on current consumption demand persists. However, due to the delivery logic providing a floor, spot discounts received some support, and the downside space for premiums is limited. Going forward, attention should be paid to the outflow of unmatched warrants. After delivery is completed, the market is expected to enter a new round of pricing dynamics around the 2606 contract.
