SMM Morning Briefing: Overnight LME copper opened at $13,754.5/mt, dipped to a low of $13,740/mt in early trading, then its center rose to a high of $13,836/mt, subsequently moved sideways and eventually closed at $13,978.5/mt, up 1.3%. Trading volume reached 18,000 lots, and open interest stood at 246,000 lots, a decrease of 342 lots from the previous trading day, reflecting a reduction in bearish positions. Overnight the most-traded SHFE copper 2609 contract opened at 105,370 yuan/mt, dipped to a low of 105,250 yuan/mt early in the session, then its center rose to a high of 105,750 yuan/mt, eventually moved sideways to close at 105,560 yuan/mt, up 0.75%. Trading volume reached 40,000 lots, and open interest stood at 197,000 lots, an increase of 1,132 lots from the previous trading day, reflecting an increase in bullish positions.

This week, the center of Shanghai spot copper premiums consolidated and pulled back. At the start of the week, imported cargoes arrived successively at ports, marginally easing the previous tightness in available supplies. Meanwhile, as month-end approached, the price spread between cargoes with invoices dated this month and next month widened, with some demand to cover this-month invoices providing some support to prices. Mid-week, the pullback in SHFE copper prices led to a slight improvement in downstream bargain-hunting inquiries, and together with month-end invoice demand, spot premiums briefly stabilized. Subsequently, copper prices held up well again, downstream purchasing sentiment cooled, and terminal purchase willingness was mostly concentrated at spot premiums below 200 yuan/mt, with a notable psychological price gap between buyers and sellers. In terms of inventory, SMM data showed that social inventory in Shanghai was 69,500 mt, down 500 mt from this Monday; inventory in Jiangsu was 21,200 mt, down 500 mt from this Monday. Inventory in east China destocked slightly, still providing some support to premiums. Looking ahead to next week, with the start of a new procurement cycle, the sluggish trading at month-end may improve. Some downstream enterprises have phased restocking needs, and spot procurement volumes may rebound marginally. However, SMM understands that the current psychological price level for terminals is mainly concentrated at SHFE copper 104,500–104,800 yuan/mt. If the futures market stays high, the actual release of procurement volumes will still be limited. On the supply side, earlier imported cargoes have already arrived at ports, and the subsequent arrival growth remains to be seen. Meanwhile, absolute inventory in east China remains low, and combined with the backwardation structure for the next-month contract, this provides support to spot premiums. Overall, it is expected that next week, spot copper prices against the SHFE copper 2608 contract will remain at a premium, and the center of premiums may stop falling and stabilize. If copper prices pull back to around downstream psychological levels, improved spot transactions could push premiums slightly higher.

[SMM Shanghai Spot Copper] Tomorrow, with month-end approaching, downstream enterprises are expected to still primarily purchase based on rigid demand. The slight intraday uptick in SHFE copper prices today dampened market purchasing sentiment, and spot trading activity tomorrow is likely to decline compared with the previous trading day. According to SMM, current downstream purchase willingness is largely concentrated at premiums below 200 yuan/mt, with a significant psychological price gap between buyers and sellers. Suppliers may continue to lower offers to facilitate deals. Low-priced non-registered copper, due to its wide price spread with registered copper, has seen relatively decent transactions for some cargoes, but its boosting effect on overall demand is limited. As for inventory, SMM recorded social inventory in Shanghai at 69,500 mt, down 500 mt WoW from Monday; social inventory in Jiangsu at 21,200 mt, down 500 mt WoW from Monday. East China inventory saw slight destocking, still providing some support for spot premiums. However, the current decline in inventory is relatively limited, and offers for cargoes with invoices dated next month are relatively ample. Overall, against the backdrop of low inventory providing support, but weakening month-end consumption and strong downstream desire to bargain down prices, spot Shanghai copper prices against the SHFE copper 2608 contract are expected to maintain a premium tomorrow, but the overall center may continue to shift slightly lower.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, SHFE copper prices pulled back during the day, triggering a slight release of dip-buying inquiries and purchases from some downstream consumers. Buying sentiment in the Shanghai region improved from the previous trading day. However, according to SMM, current end-user orders are still mostly concentrated around 104,500 yuan/mt, and transaction prices for spot cargoes remain some distance away from downstream psychological price levels, leaving actual demand growth relatively limited. With month-end approaching, some buyers still need to restock cargoes with invoices dated this month. Supply of such cargoes is relatively tight, providing some support for their quotes. In comparison, the market for cargoes with invoices dated next month is more abundant, and suppliers show a strong willingness to sell. The price spread between current-month and next-month invoice cargoes is expected to persist. Overall, against the backdrop of copper price pullback driving dip-buying, demand for current-month invoice cargoes providing support, but only limited improvement in end-use consumption, Shanghai spot copper prices against the 2608 contract are expected to remain at a premium tomorrow, with the overall center likely to move sideways around the current level.

SMM Morning Meeting Summary: Last Friday night, LME copper opened at $13,638.5/mt, consolidated at lows initially before its center moved higher, then touched a high of $13,681.5/mt. Afterwards, the copper price center fluctuated lower, dipping to $13,605.5/mt near the session’s end, and finally settled at $13,611.5/mt, up 0.34%. Trading volume was 12,600 lots, open interest was 248,000 lots, an increase of 728 lots from the previous trading day, driven by bullish position-building. Last Friday night, the most-traded SHFE copper 2609 contract opened at 104,600 yuan/mt, dipped to 104,540 yuan/mt right at the start, then its center rose to touch a high of 104,310 yuan/mt, before moving lower to finally settle at 104,630 yuan/mt, down 0.1%. Trading volume was 25,000 lots, open interest was 207,000 lots, a decrease of 3,481 lots from the previous trading day, reflecting bullish position reduction.

[SMM Shanghai Spot Copper] Looking ahead to next week, the current tight supply of available spot cargoes remains unchanged. After low-priced sources were quickly absorbed intraday, suppliers' willingness to hold prices firm re-emerged, with the premium rebounding to around 300 yuan/mt, indicating strong support from below. According to SMM, after a slight correction in SHFE copper prices, end-use demand emerged, and orders for some copper processing enterprises increased, with end-users mostly placing orders around 104,500 yuan/mt. In terms of supply, some LME cancelled warrants have already been shipped to China and are expected to arrive gradually around next week; the actual supply remains to be observed. Overall, with low inventory, support from the backwardation structure, and downstream dip-buying, Shanghai spot copper prices against the SHFE 2608 contract are expected to maintain a premium next week, though the overall center may edge down slightly. Attention should be paid to the actual impact of import arrival pace on spot circulation.