Dear SMM Users,

In recent years, as the volume of EQ cathode circulating in China’s copper cathode spot market has gradually increased, its supply availability, market acceptance and trading activity have all improved. Influenced by factors including import arrivals, market inventories, brand differences, downstream demand and regional circulation, the premium of EQ cathode relative to the futures market may fluctuate considerably. As a result, market demand has continued to grow for an independent and objective benchmark that reflects actual EQ cathode spot market transactions.

To further improve SMM’s copper cathode spot price assessment system, provide a timely and objective reflection of actual EQ cathode spot market transactions, enhance market price transparency, and offer a reliable reference for spot procurement, sales, settlement and risk management across the industry chain, Shanghai Metals Market (“SMM”), following an extended period of market research and data accumulation, has decided to officially launch the following two price data points starting September 1, 2026:

1. SMM EQ Cathode Premium

2. SMM EQ Cathode

Among these, the SMM EQ Cathode Premium will serve as the primary market data collection and price assessment benchmark.

SMM price subscribers will be able to access the relevant prices and historical trends through the SMM official website, the SMM mobile application and the SMM Metals Industry Chain Database.

I. General Principles of SMM Price Methodology

Shanghai Metals Market (“SMM”) is a fully independent third-party service provider. SMM does not participate in any physical spot transactions. Instead, SMM acts as a market observer, maintaining close communication with buyers, sellers and other relevant market participants, while providing the market with price assessments, data and research services.

Through continuous communication with industry participants, SMM develops, reviews and revises its price methodologies and adopts the most commonly used and representative product specifications, trading terms and transaction conditions in the market.

SMM gives equal consideration to normal market transactions that meet standard product specifications and standard trading conditions. SMM reserves the right to exclude price information that is insufficiently reliable, unrepresentative, unverifiable or clearly inconsistent with prevailing market levels.

This document sets out the product specifications, trading conditions, data collection procedures, price assessment methodology, calculation methods and publication process for the SMM EQ Cathode Premium and SMM EQ Cathode. It is intended to establish a transparent, standardized and verifiable price formation mechanism so that the published prices reflect, as accurately as possible, actual trading conditions in China’s EQ cathode spot market.

II. Formation of SMM EQ Cathode Prices

2.1 Purpose of the Price Assessments

EQ cathode mainly refers to copper cathodes that are not simultaneously registered as deliverable brands on both the London Metal Exchange (“LME”) and the Shanghai Futures Exchange (“SHFE”), but whose product quality meets the relevant Grade A copper cathode standards and which can be normally traded and consumed in China’s mainstream spot market.

Accordingly, copper cathodes registered on only one of the two exchanges, or registered on neither exchange, may fall within the scope of EQ cathode provided that they meet the applicable Grade A quality requirements and other criteria specified in this methodology.

Due to differences between EQ cathode and copper cathode brands registered on both exchanges in terms of brand recognition, market liquidity, supply stability, downstream applicability and actual delivery conditions, EQ cathode exhibits its own distinct premium characteristics relative to SHFE copper futures contracts.

The launch of the SMM EQ Cathode Premium and SMM EQ Cathode is intended to reflect actual transaction levels and potentially executable transaction levels for EQ cathode under standardized spot trading conditions in East China.

The standard delivery basis is primarily ex-warehouse at major warehouses in Shanghai. Transactions involving delivery from other locations in East China or direct delivery to downstream plants will be normalized to the standard Shanghai ex-warehouse basis.

The assessments are intended to provide a more direct and transparent price reference for the procurement, sale, trading and settlement of EQ cathode.

2.2 Product Specifications and Standards

The products represented by the SMM EQ Cathode Premium and SMM EQ Cathode are:

Copper cathodes that are not simultaneously registered as deliverable brands on both the LME and the SHFE, but whose product quality meets the relevant Grade A copper cathode standards and which can be normally traded and consumed in China’s mainstream spot market.

EQ cathode included in the price assessment should, in principle, comply with the relevant chemical composition requirements for Grade A copper cathodes under the following standards:

• GB/T 467—2010, Cu-CATH-1;

• Relevant Grade A copper cathode requirements under BS EN 1978.

The product shall be in the form of electrolytic copper cathode sheets. Product quality, packaging and appearance shall be suitable for normal production and consumption by mainstream copper fabricators in China.

Material involving significant quality disputes, failing to meet Grade A copper cathode requirements based on inspection results, having materially abnormal packaging or appearance, being unable to circulate normally in China’s mainstream market, or carrying special quality guarantees or other non-standard commercial terms will, in principle, not be included in the standard price assessment.

2.3 Published Price Data Points

2.3.1 SMM EQ Cathode Premium

The SMM EQ Cathode Premium reflects the premium of EQ cathode spot transactions in Shanghai relative to the current-month SHFE copper futures contract.

SMM primarily collects and assesses the following information provided by market participants:

• Premium levels of actual EQ cathode transactions;

• Executable seller offers;

• Executable buyer bids;

• Potentially executable premium levels confirmed by multiple independent market participants;

• Premium levels derived through standardization from transactions concluded on an outright price basis.

The SMM EQ Cathode Premium is published in yuan/mt and includes:

• Low;

• High;

• Average.

The average is calculated as follows:

SMM EQ Cathode Premium Average =
(Low + High) ÷ 2

The SMM EQ Cathode Premium may be expressed as either a positive or negative value. A negative premium represents a price below the relevant futures benchmark.

2.3.2 SMM EQ Cathode

The SMM EQ Cathode is a VAT-inclusive RMB price calculated based on the applicable futures benchmark price and the average SMM EQ Cathode Premium.

The SMM EQ Cathode is a calculated price and is not subject to independent market data collection or assessment.

The calculation formula is:

SMM EQ Cathode =
SMM #1 Copper Cathode Futures Benchmark Price + SMM EQ Cathode Premium Average

Where:

• SMM #1 Copper Cathode Futures Benchmark Price refers to the SHFE copper futures benchmark price adopted in SMM’s daily SMM #1 Copper Cathode price assessment;

• SMM EQ Cathode Premium Average refers to the average of the SMM EQ Cathode Premium range published by SMM on the same day;

• Where the SMM EQ Cathode Premium is negative, the negative value shall be directly applied in the calculation of the SMM EQ Cathode.

The SMM EQ Cathode is published in yuan/mt, including 13% VAT, and will in principle be published as a single price.

The reference futures contract, futures price assessment window, determination of the futures benchmark price, contract rollover procedures and rules for handling abnormal market conditions will all follow the existing SMM #1 Copper Cathode Price Methodology. No separate futures benchmark pricing rules will be established for the SMM EQ Cathode.

2.4 Price Terms

The SMM EQ Cathode Premium and SMM EQ Cathode reflect actual transaction levels or potentially executable transaction levels for EQ cathode under standardized market conditions.

The standard terms for the SMM EQ Cathode are:

• Currency: RMB;

• Unit: yuan/mt;

• Tax: Including 13% VAT;

• Delivery location: Ex-warehouse at major warehouses in Shanghai; other delivery arrangements will be normalized to this basis;

• Delivery method: Buyer pickup from the warehouse;

• Payment terms: Cash, or other payment methods normalized to a cash basis;

• Delivery timing: Same-day delivery.

The standard terms for the SMM EQ Cathode Premium are:

• Currency: RMB;

• Unit: yuan/mt;

• Tax: Including 13% VAT;

• Delivery location: Ex-warehouse at major warehouses in Shanghai and quoted against the current-month SHFE copper futures contract; other delivery arrangements will be normalized to this basis;

• Delivery method: Buyer pickup from the warehouse;

• Payment terms: Cash, or other payment methods normalized to a cash basis;

• Delivery timing: Same-day delivery.

The assessed prices exclude transportation costs incurred in delivering material from the warehouse to a location designated by the buyer. They also exclude additional costs arising from extended payment terms, special financing arrangements, special packaging, special quality guarantees or other non-standard commercial conditions.

2.5 Payment Terms

The standard payment condition reflected in the assessments is cash payment, or other payment methods normalized to a cash basis. Payment should, in principle, be made or received on the transaction date.

Where an actual transaction involves deferred payment, letters of credit, bank acceptance drafts, cross-period payment or other non-standard payment conditions, SMM will take into consideration financing costs, payment periods and transaction volumes and normalize the relevant price information to equivalent cash spot trading terms.

Where payment terms differ materially from the standard terms and cannot be reasonably normalized, the relevant transaction information will, in principle, not be included in the price assessment.

2.6 Delivery Timing

The standard delivery timing reflected in the price assessment is same-day delivery.

Where an actual transaction specifies delivery at a later date, SMM will take into consideration delivery timing, financing costs, warehousing costs and changes in market structure in standardizing the relevant price information.

Material involving forward delivery, material that has not completed import customs clearance, material that has not yet entered freely available domestic inventories, or material for which title transfer or delivery timing remains materially uncertain will, in principle, not be directly included in the daily SMM EQ Cathode Premium assessment.

2.7 Reference Transaction Volume

SMM defines a typical transaction volume capable of representing mainstream EQ cathode spot market circulation as follows:

A single transaction should, in principle, be no smaller than 200 mt.

For transactions below 200 mt, SMM will assess their price representativeness, transaction terms, verifiability and market repeatability before determining whether they may be incorporated as supplementary information.

For transactions materially larger than prevailing mainstream transaction sizes and involving special procurement, financing or delivery arrangements, SMM will first normalize the relevant transaction terms before determining whether the information should be included in the assessment.

2.8 Delivery Location

The standard delivery location is a mainstream copper cathode spot warehouse in Shanghai, with delivery on a buyer pickup basis.

For EQ cathode transactions involving warehouses in other regions, SMM will consider regional price differentials, transportation costs, warehousing costs and local supply-demand conditions, and normalize the transaction information to standard Shanghai delivery terms before assessment.

Where there is no stable and verifiable price relationship between the relevant region and Shanghai, such data will only be used as supplementary market information and will not be directly included in the daily assessed price range.

III. Price Data Collection and Assessment

3.1 Core Assessment Benchmark

The primary benchmark for SMM’s EQ cathode price assessment system is:

The premium of EQ cathode spot material relative to the current-month SHFE copper futures contract.

The SMM EQ Cathode is derived through formula-based calculation and is not independently assessed.

3.2 Data Collection

In accordance with SMM’s price submission and confirmation procedures, SMM price analysts collect market information from EQ cathode market participants through telephone calls, WeChat, email, face-to-face discussions and other communication channels.

Information collected includes, but is not limited to:

• Premium levels and volumes of actual transactions;

• Seller offer levels and executable volumes;

• Buyer bid levels and intended procurement volumes;

• Outright prices of actual transactions;

• Product brands and origins;

• Delivery warehouse and delivery timing;

• Payment terms and invoice conditions;

• Available supply, import arrivals and market inventories;

• Premium levels that market participants consider most likely to result in a transaction.

Information included in the assessment should be obtained from market participants that are financially and legally independent of one another and should demonstrate representativeness, verifiability and a reasonable degree of market repeatability.

3.3 Hierarchy of Price Assessment Information

Where transaction, offer and bid information are all available, SMM will, in principle, assess the information according to the following hierarchy:

1. Actual transaction premiums verified by multiple market participants;

2. Actual outright transaction prices standardized into equivalent premium levels;

3. Seller offers with clearly executable volumes;

4. Buyer bids with clearly stated procurement volumes;

5. Potentially executable premium levels confirmed by multiple independent market participants;

6. Market inventories, arrivals, consumption and other supplementary market information.

Where trading activity is relatively high and multiple qualifying transactions are available, SMM will assess standardized transaction data by comprehensively considering transaction volume, transaction timing, trading terms and representativeness.

Where the number of actual transactions is limited, SMM will combine executable offers, bids and potentially executable levels provided by multiple independent market participants in its assessment of the premium range.

Where no actual transaction occurs during the assessment period but representative offers, bids and potentially executable prices are available, SMM may still establish the daily SMM EQ Cathode Premium assessment based on standardized market information.

3.4 Data Standardization

Actual market transactions may be affected by factors including brand, origin, order volume, delivery timing, payment conditions, invoice terms, warehouse location and downstream applicability.

SMM will normalize transactions involving non-standard terms to the standard product specifications and trading conditions defined in this methodology before including them in the price assessment.

Where the accuracy of price information is questionable, where information cannot be cross-verified, where a transaction is clearly non-repeatable, or where a quoted price deviates materially from prevailing market levels, the SMM price analyst will contact the information provider again for verification.

If the relevant information cannot be reasonably explained or verified, it will not be included in the final price assessment.

IV. Price Publication Schedule

The SMM EQ Cathode Premium and SMM EQ Cathode will be published daily.

The prices will be published on each working day in conjunction with the SMM #1 Copper Cathode price, excluding weekends and statutory public holidays in China, and will in principle be released at 11:00 a.m. Beijing time.

SMM price analysts will, in principle, conduct market information collection and price assessment during the morning of each working day. Market information submitted after the daily assessment cutoff time will, in principle, not be used in that day’s price assessment.

In the event of power outages, network failures, natural disasters or other force majeure circumstances that prevent prices from being published on schedule, SMM will make every reasonable effort to promptly inform the market of the situation.

V. Price Publication Format

The SMM EQ Cathode Premium will be published as a range comprising:

• Low;

• High;

• Average.

The unit is yuan/mt.

The SMM EQ Cathode will be published as a single value in yuan/mt, including 13% VAT.

The price publication process is as follows:

Market Data Collection → Data Completeness Review → Standardization of Transaction Terms → Premium Assessment → Internal Review → Premium Publication → SMM EQ Cathode Calculation and Publication

Following publication, SMM will, in principle, not revise the daily price solely on the basis of new transactions occurring after the publication time.

Where an operational, data-entry or calculation error is identified, SMM will make a correction and publish an explanation in accordance with the SMM Price Correction Policy.

VI. Methodology Changes

SMM will periodically review the applicability of this methodology in response to changes in the trading structure, circulation volume and commercial practices of the EQ cathode spot market.

For material and non-urgent methodology changes, SMM will, in principle, conduct an external consultation and announcement process before formal implementation and will invite relevant companies and market participants across the industry chain to provide feedback.

Where natural disasters, major market risk events or other force majeure circumstances result in urgent changes to market trading mechanisms, SMM may shorten the notification period for methodology changes as appropriate.

SMM will carefully consider feedback submitted by market participants. However, in order to maintain the representativeness, independence and continuity of its price assessments, SMM reserves the right to make the final determination based on actual market conditions.

SMM welcomes EQ cathode importers, trading companies, spot holders and downstream copper fabricators to participate in the price submission process and jointly support SMM in further improving China’s copper cathode spot price assessment system, thereby providing the market with more objective, transparent and representative price references.

For any questions or suggestions, please contact the SMM Copper Price Research Team.

Shanghai Metals Market (SMM)

August 25, 2026

Geng Zhiyao
Tel: +86-21-5166 6713
Email: gengzhiyao@smm.cn

Xu Pengfei
Tel: +86-21-5159 5908
Email: xupengfei@smm.cn