[SMM Import & Export Copper Market Flash] Recently, the import loss for Chinese copper cathode has continued to widen, and the export window for copper cathode has begun to open. As of press time, the import loss for the August contract is about 1,700 yuan/mt, and for the September contract, about 900 yuan/mt. According to SMM, the opening of the export window for copper cathode this round is mainly due to the significant backwardation structure of LME nearby contracts. Changes in Chinese and overseas market prices and term structures have created export arbitrage conditions for some copper cathode. Currently, the planned exports are about 20,000 mt. However, as the August contract approaches delivery, the exported copper cathode mainly flows into Chinese bonded zones. Going forward, as the Chinese and overseas market term structures are further adjusted, the copper cathode export window and goods flow still need continuous attention.

Looking ahead to tomorrow, with delivery approaching, the intermonth backwardation spread is expected to widen further. The cost of contract rollover for some suppliers will rise significantly, strengthening their willingness to sell spot copper and pushing quotes for standard-quality copper to quickly drop into discount territory. Meanwhile, amid relatively strong front-month contract prices, some deliverable material is inclined to be converted into warrants, resulting in divergent spot cargo flows. As of August 11, SHFE copper registered warrants stood at about 23,200 mt. As of the morning session close on August 12, open interest in the SHFE copper 2608 contract remained at about 23,000 lots. The pace of the pullback in open interest and changes in warrants ahead of delivery still warrants close attention. On the demand side, end-use consumption remained weak, with downstream procurement still largely need-based. Low-priced non-registered copper attracted active trading on the back of its price advantage, but this has yet to lead to a significant improvement in overall procurement. Overall, amid the widening backwardation spread, increased supplier willingness to sell, and weak end-use demand, quotes for Shanghai spot copper against the 2608 contract are expected to remain under pressure tomorrow, with spot copper likely staying at a discount.

[SMM Shanghai spot copper] Looking ahead to tomorrow, as delivery approaches and the inter-month backwardation spread widens further, the cost of rolling over positions for some suppliers has risen noticeably, boosting their willingness to sell spot cargoes, which has pushed mainstream standard-quality copper quotes quickly down to a discount range. Meanwhile, against the relatively strong front-month contract price, some deliverable material is being shifted to warrants, leading to a divergence in spot cargo flows. As of August 11, SHFE copper registered warrants stood at approximately 23,200 mt; as of the morning close on August 12, open interest in the SHFE copper 2608 contract remained around 23,000 lots. The pace of open interest pullback and warrant changes ahead of delivery still warrants close attention. On the demand side, end-use consumption remains sluggish, with downstream purchases still largely need-based, and low-priced non-registered copper trading relatively actively on price advantage but not yet driving a noticeable improvement in overall procurement. Taken together, with the widening backwardation spread, increased willingness to sell among suppliers, and weak end-use demand, spot copper prices against the SHFE 2608 contract are expected to remain under pressure tomorrow, and the spot is likely to stay at a discount.

On August 12, the average warrant price fell $3/mt from the previous trading day to $96/mt (price range: $89-103/mt); the average B/L price fell $5/mt to $90/mt (price range: $85-95/mt); the average price of EQ copper (CIF B/L) fell $1/mt to $62/mt (price range: $56-68/mt), with quotations referring to cargoes arriving from August to early September. The LME near-end backwardation structure continued to widen, the SHFE/LME price ratio was inverted, downstream purchasing interest remained subdued, and some domestic smelters exported small volumes to bonded warehouses. At the time, bids and offers diverged significantly, making actual transactions difficult, and psychological price expectations shifted lower. Mainstream quotations in the market were heard at $90-95/mt for August-arriving registered B/L, $100-105/mt for August registered warrants, and $65-70/mt for August-arriving EQ copper.

SMM Morning Meeting Summary: Overnight LME copper opened at $14,208/mt, touched a high of $14,218/mt in early fluctuations, then drifted lower all the way to $14,142/mt near the end of the session, and finally closed at $14,153/mt, up 0.23%. Trading volume was 15,700 lots, and open interest stood at 261,000 lots, an increase of 2,675 lots from the previous trading day, indicating an increase in bearish positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,200 yuan/mt, with the price center moving up to touch 108,320 yuan/mt in early trading, then drifting lower to a low of 107,900 yuan/mt, before closing at 108,000 yuan/mt, up 0.04%. Trading volume reached 21,000 lots, and open interest was 213,000 lots, a decrease of 1,714 lots from the previous trading day, indicating a decrease in bearish positions.

[SMM Shanghai spot copper] Looking ahead to tomorrow, as delivery approaches, the inter-month backwardation has further widened to above 300-400 yuan/mt. The cost of contract rollover rises accordingly for suppliers, and their willingness to sell spot copper increases, significantly capping premiums against the front-month contract. Today, sentiment in sales and procurement improved somewhat from yesterday, but as the SHFE copper price center rose above 108,000 yuan/mt, downstream users still mainly made just-in-time procurement, showing limited acceptance of high-priced offers. Meanwhile, some standard-quality copper has fallen to a discount of 10 yuan/mt to near parity, discounts for non-registered copper have widened further, and low-priced sources continue to weigh on mainstream standard-quality copper quotes. Overall, driven by the widening backwardation spread, increased willingness to sell among suppliers near delivery, and high copper prices suppressing consumption, the price center of Shanghai spot copper quotes against the 2608 contract is expected to continue to shift lower tomorrow, possibly showing a discount.