Price Spread Between Nearby Futures Contracts Narrowed Slightly, Shanghai Spot Copper Premiums Continued to Widen Under Pressure [SMM Shanghai Spot Copper]

SMM May 28 update:

Today, SMM #1 copper cathode spot prices against the current-month 2606 contract were quoted at a discount of 180 yuan/mt to parity, with an average quote at a discount of 90 yuan/mt. During the morning session, the SHFE copper 2606 contract edged down before stabilizing and rebounding, opening at 103,980 yuan/mt. After the opening, prices edged down, dipping to 103,510 yuan/mt, before stabilizing and fluctuating between 103,650 yuan/mt and 103,830 yuan/mt, with a closing price of 103,830 yuan/mt. The inter-month Contango price spread ranged between 110 yuan/mt and 50 yuan/mt. The SHFE copper import profit margin against the 2606 contract ranged from a loss of 210 yuan/mt to a loss of 120 yuan/mt.

Intraday, the selling sentiment for copper cathode in Shanghai was 2.65, up 0.01 MoM, and the purchasing sentiment was 2.67, up 0.07 MoM. Historical data can be accessed via the database. At the start of the morning session, suppliers offered standard-quality copper at discounts of 150-120 yuan/mt, with Lufang, Xiangguang, and JCC quoting cargoes with invoices dated this month at discounts of 140-130 yuan/mt, and Zhongtiaoshan and Dajiang HS at discounts of 170-160 yuan/mt. Suppliers then quickly lowered prices, with Lufang, Xiangguang, and JCC offering cargoes with invoices dated this month at discounts of 150-130 yuan/mt, ONSAN, Zhongtiaoshan PC, Jinchuan ISA, Zijin, and ONSAN at discounts of 180-160 yuan/mt, and Jinguan, Jinxin, Jintun PC, and Jinfeng quoting cargoes with invoices dated this month at a discount of 120 yuan/mt ex-factory. High-quality copper was scarce, so quotes remained firm, with Jinchuan high-purity, Jintun large cathode, and Guiye quoting cargoes with invoices dated this month at a discount of 20 yuan/mt to parity. Entering the second session, prices saw no significant changes. Jinguan, Jinxin, and Jintun PC were successively traded at discounts of 150-120 yuan/mt ex-factory for cargoes with invoices dated this month. Tongguan was successively traded at discounts of 60-50 yuan/mt ex-factory for cargoes with invoices dated this month. Unregistered copper was successively traded at discounts of 320-300 yuan/mt for cargoes with invoices dated next month.

Outlook for tomorrow: Copper prices edged down intraday, activating some downstream buying interest. According to SMM, some processing enterprises in east China saw improved orders compared to yesterday, and end-users mostly placed orders at around 103,600 yuan/mt. Available supply in the Changzhou area became relatively tight, which is expected to provide some support for local spot prices. Market structure side, the inter-month Contango price spread narrowed slightly, weakening suppliers' willingness to ship to delivery warehouses. Marginal pressure on spot circulation increased, pushing discounts to widen further. Overall, amid the interplay of narrowing price spreads suppressing discounts, limited marginal improvement in demand, and tight regional supply, Shanghai spot copper prices against the 2606 contract are expected to remain at a discount tomorrow, continuing to stay under pressure.