In the morning session, the SHFE copper 2506 contract briefly dipped to 78,660 yuan/mt before rising to 78,860 yuan/mt, and then continued to pull back. The price spread between futures contracts (BACK) for the next month continued to fluctuate around 100 yuan/mt, showing no signs of a rally for the time being. The import loss for the current month's SHFE copper narrowed to around 1,150 yuan/mt compared to previous days. Major smelters have largely locked in their export volumes, shipping supplies to bonded zones and LME Asian warehouses.

In the morning session, the SHFE copper 2506 contract briefly dipped to 78,660 yuan/mt before rising to 78,860 yuan/mt, and then continued to pull back. The price spread between futures contracts for the next month (BACK) continued to fluctuate around 100 yuan/mt, showing no signs of a rally for the time being. The import loss for the current month's SHFE copper narrowed to around 1,150 yuan/mt compared to a few days ago. Major smelters have largely locked in their export volumes, shipping their supplies to bonded zones and LME Asian warehouses.

In terms of consumption, there is still a lag in the transmission of terminal orders to the upstream sector. Orders for primary processed materials are average. Given the weak demand, it is difficult for spot premiums to improve, and the near-month structure is expected to widen significantly.

[SMM Analysis] It cannot be ignored that the shortage of copper concentrates has gradually been transmitted to copper cathode. In the first half of 2024, there were continuous reports of production cuts and even shutdowns at overseas smelters. This indicates that despite the launch of new smelting and refining projects in the second half of the year (H2), the global supply of copper cathode will not ease.

[SMM Analysis] In May, Shanghai spot copper premiums jumped initially and then pulled back, rapidly retreating after briefly touching premiums above 400 yuan/mt. Before the contract rollover of SHFE copper 2505, due to the mismatch between high open interest and low warrants for the current month, the backwardation structure of the near-month contracts continued to rise to above 500 yuan/mt. After the contract rollover, the price spread between futures contracts naturally shifted to premiums against the SHFE copper 2506 contract, hence presenting a brief period of high premiums. As copper prices remained high after the contract rollover, downstream purchasing sentiment weakened. Coupled with arbitrageurs closing out their profitable positions from the previous structure, spot traders actively sold off their inventory, causing spot premiums to decline.

》Check SMM metal quotes, data, and market analysis 》Subscribe to view historical price trends of SMM metal spot cargo This week, spot premiums first declined and then rose, mainly due to the continuous arrival of imported copper. However, as the Dragon Boat Festival holiday approached, downstream players still had stockpiling sentiment, with cargo pick-up improving mid-week and inventories declining during the week. Looking ahead after the holiday, as LME Asian inventories continue to flow into China, it is expected that there will be continuous arrivals during the Dragon Boat Festival, providing downstream buyers with more purchasing options and further driving down prices. Currently, copper prices are stabilizing around 78,000 yuan/mt, with no significant improvement in downstream orders or operations. Therefore, it is expected that the east China market will face pressure from oversupply next week. 》Check SMM metal industry chain database