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.

In North China today, spot #1 copper cathode prices against the front-month contract were quoted at discounts of 350-260 yuan/mt, with an average discount of 305 yuan/mt, down 50 yuan/mt from the previous trading day. The average transaction price was 108,230 yuan/mt, down 70 yuan/mt from the previous trading day.

SMM August 12 news: Today, spot prices of Guangdong #1 copper cathode against the front-month contract: high-quality copper was quoted at a premium of 20 yuan/mt, down 80 yuan/mt from the previous trading day; standard-quality copper was at a discount of 80 yuan/mt, down 90 yuan/mt; SX-EW copper was at a discount of 140 yuan/mt, down 90 yuan/mt. The average price of #1 copper cathode in Guangdong was 108,410 yuan/mt, down 155 yuan/mt from the previous trading day, while the average price of SX-EW copper was 108,300 yuan/mt, down 160 yuan/mt. Spot market: Guangdong’s inventory ended a two-session increase and declined again, as the earlier concentrated arrivals ended and arrivals decreased again. As the price spread between futures contracts widened further to 400 yuan/mt today, downstream consumers were reluctant to purchase, and suppliers had to continuously lower premiums to sell. The price of standard-quality copper dropped from an initial 0 yuan/mt to a discount of 80 yuan/mt, where only a small number of deals were made. Today, the purchasing sentiment for copper cathode in Guangdong was 2.24, down 0.07 from the previous trading day, and the selling sentiment was 2.99, up 0.07 (historical data can be accessed by logging into the database). Overall, the price spread widened significantly, prompting suppliers to rush to sell and cut prices sharply, but transactions remained unsatisfactory.

According to SMM, in July, the operating rate of copper cathode rod enterprises was 67.01%, down 1.7 percentage points MoM, up 0.84 percentage points from expectations, and up 0.5 percentage points YoY. Among them, the operating rate of large enterprises was 78.83%, medium-sized enterprises 48.73%, and small enterprises 58.05%. In July, the operating rate of copper cathode rod enterprises stood at 67.01%, down 1.7 percentage points MoM but up 0.5 percentage points YoY (the operating rate in July last year was 66.51%). Overall, copper prices sustained an upward trend in July, compounded by the persistently high premium on spot copper cathode earlier. As the market entered the traditional consumption off-season, downstream end-user orders were already weak; high copper prices further suppressed purchase willingness, causing new orders for copper cathode rod enterprises to keep weakening. Against this backdrop, many copper cathode rod plants voluntarily arranged maintenance and production cuts, the industry-wide operating level pulled back, and output of copper cathode rod declined. By downstream sector, the two major consumption areas of wire and cable and enamelled wire also bore the impact of high copper prices; enterprises grew more cautious in stockpiling and proactively controlled raw material inventory, while industry orders contracted in tandem, and overall demand exhibited a clear seasonal pullback. In July, days of raw material inventories for copper cathode rod enterprises stood at 2.04 days, while days of finished product inventories were 3.66 days. Copper prices kept rising this month, making enterprises generally more cautious in raw material procurement. Most adopted a strategy of purchasing as needed and restocking only for rigid demand, with days of raw material inventories up 0.1 days MoM. Meanwhile, sluggish downstream wire & cable and enamelled wire demand and lackluster production enthusiasm impeded finished product destocking, pushing days of finished product inventories up 0.22 days MoM. The operating rate of copper cathode rod enterprises is expected to be 64.75% in August. Looking ahead to August, the copper cathode rod operating rate is expected to decline 2.26 percentage points MoM to 64.75%, and drop 3.62 percentage points YoY. Copper prices stay high, downstream fear of high prices continues to ferment, wait-and-see sentiment in the market remains thick, new orders are unlikely to recover significantly, and the industry's August operating may continue to trend weakly. On the foreign trade side, imported copper premiums have pulled back. Affected by July orders falling short of expectations, some copper cathode rod enterprises lowered their quotes and accelerated the delivery pace of long-term contracts, which is expected to drive a MoM rebound in August exports. However, incremental new orders from outside China are limited, making it difficult to reverse weak domestic demand.