High copper prices, ample supply, weak demand, inventory buildup, weak structure ↓ Falling copper prices, still ample supply, good demand, destocking, slightly stronger structure ↓ Fluctuating copper prices, relatively tight supply, demand fluctuating with copper prices, high probability of destocking, high probability of strengthening structure Q1 2026 has ended, and April trading days are also about to end. The above two sentences summarize SHFE copper futures and spot market performance. Note that this refers only to copper cathode supply, as China saw significant production increases in 2025. Despite continued ore tightness, production in 2026 has also remained fluctuating at highs, keeping copper cathode supply persistently ample. Demand side, although annual demand showed growth, when broken down to monthly or even daily levels, demand was significantly influenced by copper prices. Amid copper price fluctuations, secondary copper was the "active player" — when copper prices were high, secondary copper shipments increased, benefiting both supply and demand sides; when copper prices fell, secondary copper shipments decreased, reducing some raw material supply for both supply and demand. So recently the spot market appeared to have tight supply. Smelters began shifting to "high prices with high volumes" in shipments. Against the backdrop of continued destocking and concentrated smelter maintenance, can premiums "heat up"? The chart above shows that from a macro perspective, copper prices and Shanghai spot copper premiums exhibited a clear inverse correlation in recent years. However, from a detailed perspective, Shanghai spot copper premiums have recently shown signs of "picking up" under high copper prices. 1. Although inventory continued destocking, the current warrant-to-inventory ratio remained elevated (this indicator is highly correlated with structure). The SHFE copper near-month structure has not shown a sustained backwardation structure to provide guidance for future premiums. 2. Although copper prices returned to highs, overall secondary copper shipment sentiment remained subdued, providing limited supplementation to copper cathode production and consumption. Previously, the price difference between primary metal and scrap was inverted, which favored copper cathode consumption. During this process, non-registered supply supplementation was limited, and the price spread between non-registered and SX-EW copper also narrowed. Imported copper supplementation within the year decreased YoY compared to previous years. Taking DRC as an example, non-registered supply was also diverted. Overall, substitutes for registered copper cathode decreased. 3. Copper cathode supply itself is about to decrease in the coming months, with concentrated maintenance currently underway in the market. Social inventory is expected to further decline. As inventory decreases and the warrant-to-inventory ratio declines, the far-month structure has already shifted to backwardation. China's spot premiums are also expected to pick up in the near term. It has been observed that Guangdong spot premiums have been consistently higher than other regions nationwide for several consecutive days. Downstream buyers in Jiangsu, Zhejiang, Shanghai, and Anhui have recently tended to purchase from direct producers and traders with inventory who can issue invoices for the current month. Shanghai spot copper premiums are expected to see a small spike before the Labour Day holiday. After the holiday, as domestic supply decreases, premiums are expected to gradually firm up. However, the warrant-to-inventory ratio remains relatively high, and a sustained shift to backwardation in the structure still requires patience.

The most-traded BC copper contract 2606 opened at 89,560 yuan/mt today. It maintained wild swings in early trading, then the copper price center gradually shifted upward to 89,990 yuan/mt after the daytime session opened, before fluctuating downward to a low of 89,150 yuan/mt, and finally closed at 89,460 yuan/mt, down 0.26%. Open interest stood at 9,089 lots, an increase of 166 lots from the previous trading day, with trading volume at 5,934 lots, indicating bears adding positions. The US Fed kept the current interest rate unchanged, with notable internal policy stance divergence. Powell will remain as a governor after stepping down as Fed Chairman, and Warsh's nomination has passed the Senate committee review. Trump stated that conditions were currently suitable for an interest rate cut, while making clear that sanctions on Iran would not be lifted until the Iranian nuclear issue is resolved. The US and Iran are currently maintaining phone communications. Iran released a tough signal, warning that if the US continued to seize vessels, it might take unprecedented military countermeasures, with related retaliation plans still advancing. Combined with rising international crude oil prices, the overall atmosphere exerted some pressure on copper prices. Fundamentals side, on the supply end, arrivals of imported copper pulled back, while domestic source arrivals remained stable. However, approaching the month-end settlement period, suppliers showed weak willingness to sell, and spot circulation remained tight. Demand side, end-user pre-holiday stockpiling was largely completed, overall procurement sentiment was sluggish, and spot trades were mediocre. Inventory side, as of Thursday April 30, SMM copper cathode social inventory in major regions nationwide decreased by 5,600 mt WoW to 243,000 mt; current total inventory was 113,400 mt higher compared to the same period last year at 129,600 mt. SHFE copper 2606 contract closed at 101,030 yuan/mt. Based on BC copper 2606 contract at 89,460 yuan/mt, its after-tax price was 101,089 yuan/mt, and the price spread between SHFE copper 2606 and BC copper was -59, with the spread returning to an inverted state.

[SMM Analysis] This week (April 27-April 30), Yangshan copper premiums B/L weekly average price range was 53.5-71.5 $/mt, QP June, average price $62.5/mt; warrant weekly average price range was 56-72.5 $/mt, QP May, average price $64.25/mt; EQ copper CIF B/L was 22.5-41 $/mt, QP June, average price $31.75/mt.

【SMM Copper Cathode Rod News Flash】Currently, terminal orders for copper cathode rod lacked follow-through, downstream stocking atmosphere was sluggish, and the phased demand driven by earlier copper price pullbacks faded. Post-holiday, the market will enter the traditional consumption off-season, with no incremental demand release from end-users for now. Wait-and-see sentiment in the industry is intensifying, and subsequent market trends will be highly dependent on copper price guidance.

[SMM Brass Billet News] This week (4.24-4.30), the operating rate of the brass billet industry was recorded at 52.56%, down 0.35 percentage points WoW. Copper prices continued to fluctuate at highs, and enterprises' production mainly relied on previous orders on hand, while new orders continued to weaken.

This week (4.24-4.30), the operating rate of the brass billet industry was 52.56%, down 0.35 percentage points WoW and 9.94 percentage points YoY . Copper prices continued to fluctuate at highs, and enterprise production mainly relied on previous orders on hand, while new orders continued to weaken. Recycled brass raw materials supply remained tight, raw material prices were severely inverted, enterprises faced prominent cost pressure, and raw material inventories pulled back slightly to 4.11 days. Meanwhile, the industry gradually entered the traditional off-season, downstream cargo pick-up pace slowed down, and finished product inventories of sample enterprises increased slightly to 5.51 days. Looking ahead to next week (5.1-5.7), affected by factors such as some enterprises suspending production for the Labour Day holiday, weak new orders, and raw material prices staying high, SMM expects the industry operating rate to further decline 7.57 percentage points to 44.99%.