SMM June 18:
In early trading, the SHFE copper 2607 contract opened lower with a gap and then trended weakly downward. The opening price was 105,510 yuan/mt. After the open, the price gapped lower, dipping to 104,990 yuan/mt, stabilizing before edging up to 105,200 yuan/mt, then weakening again and dipping to an intraday low of 104,460 yuan/mt. Before the close, the price edged up slightly, with a closing price of 104,590 yuan/mt. The contango spread between front-month and next-month contracts was between 120 yuan/mt and 80 yuan/mt, and the import profit margin for SHFE copper against the 2607 contract stood at a loss of 320–270 yuan/mt.
During the day, sales sentiment for copper cathode in Shanghai was 2.75, up 0.04 MoM, while purchasing sentiment was 2.65, up 0.04 MoM. Historical data can be accessed in the database. At the start of early trading, suppliers’ initial offers for standard-quality copper ranged from parity to a premium of 30 yuan/mt, with JCC, Lufang, etc. offered at premiums of 20–30 yuan/mt, and Dajiang PC, Jinguan, Zhongtiaoshan, Tiefeng, and Zijin offered at parity. Suppliers then quickly lowered offers: Tiefeng, Zhongtiaoshan, Dajiang PC, etc. were quoted at a discount of 20 yuan/mt, while Jinguan, Jinxin, Jintun PC, and Jinfeng were quoted at a premium of 30 yuan/mt EXW. High-quality copper brands Guixi, Jinchuan (plate) and Jintun (plate) were offered at premiums of 60–70 yuan/mt. Registered SX-EW copper brands ESOX, BMKMOOK, etc. were quoted at discounts of 60–40 yuan/mt. In the second session, trading was sluggish, and suppliers edged down offers: Lufang, Xiangguang, JCC, etc. offered parity to a premium of 10 yuan/mt. Unregistered copper traded at discounts of 270–160 yuan/mt.
Looking ahead to next week, copper prices edged down during the day. Coupled with pre-Dragon Boat Festival restocking, downstream dip-buying sentiment recovered somewhat, with purchasing and sales sentiment each rising 0.04 MoM, and trading of low-priced cargoes was moderate. However, suppliers kept early offers firm, with standard-quality copper at parity to a premium of 30 yuan/mt, before cutting them successively to near parity; in the second session, some brands were already offered at a discount of 20 yuan/mt. This reflects that, amid the current copper price decline, suppliers’ willingness to sell increased, while downstream buyers were unwilling to chase higher prices, resulting in slightly weak overall trading. Overall, under the pressure of high copper prices, Shanghai spot copper premiums against the SHFE 2607 contract are expected to hold at current levels next week, or edge up slightly.
