The Shanghai-Guangdong price spread widened further intraday compared to the previous day, with the current spread approaching 200 yuan/mt and the theoretical arbitrage window opening up. According to SMM, some suppliers have begun relocating inventory from Shanghai warehouses to Guangdong to capture the regional price spread gains. Going forward, if Guangdong premiums continue to remain strong, this could boost spot premiums in Shanghai and other regions.

SMM Morning Meeting Summary: Overnight, LME copper opened at $13,237/mt, touched a low of $13,213/mt early in the session before the center fluctuated upward, reached a high of $13,330/mt and then began to fluctuate downward, ultimately closing at $13,245/mt, down 0.78%, with trading volume at 18,000 lots and open interest at 281,000 lots, an increase of 478 lots from the previous trading day, indicating bears adding positions. Overnight, the most-traded SHFE copper 2606 contract opened at 102,500 yuan/mt, quickly tested a high of 102,830 yuan/mt early in the session, then copper prices dropped sharply to a low of 102,280 yuan/mt, and subsequently fluctuated downward to ultimately close at 102,490 yuan/mt, down 0.13%, with trading volume at 31,000 lots and open interest at 199,000 lots, an increase of 2,351 lots from the previous trading day, indicating bears adding positions.

[Geopolitical Negotiations Remain Unresolved; Aluminum Prices Continue LME Outperforms SHFE Pattern] Overall, the Middle East negotiation process continued to face setbacks. However, the supply gap outside China and the continued drawdown of LME inventory supported LME prices to hold up well. Meanwhile, China's aluminum ingot inventory remained at elevated levels, and attention should be paid to whether the inflection point of domestic inventory can materialize smoothly.

SMM April 20 update: SHFE aluminum 2605 fluctuated downward in early trading, but overall aluminum prices remained at high levels. End-users mainly made just-in-time procurement, and traders' buying sentiment was relatively positive, influenced by declining aluminum prices and wider premiums. Mainstream transactions in the market were concentrated around SMM A00 aluminum -10 yuan/mt to +10 yuan/mt. The shipment sentiment index in the east China market was 3.4 today, down 0.32 MoM; the procurement sentiment index was 3.06, flat MoM. SHFE aluminum prices pulled back today, but high aluminum prices still suppressed buying sentiment in the central China market. Downstream processing enterprises mostly adopted a wait-and-see approach, with slight pressure to push for lower prices in actual transactions. However, overall buying sentiment recovered compared to the previous two days. Suppliers had a strong willingness to hold prices firm, transaction prices remained stable, and the downward trend was not significant. Ultimately, actual transaction prices in the central China market ranged between a 20 yuan premium over the central China price and parity. The shipment sentiment index in the central China market was 2.85 today, flat MoM; the procurement sentiment index was 2.39, up 0.04 MoM. Inventory side, aluminum ingot inventory in major consumption areas increased by 28,000 mt MoM today, with all three regions showing inventory buildup.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, Shanghai spot copper premiums remain under pressure. Demand side, according to SMM, some downstream enterprises saw a slight improvement in orders WoW, and end-user acceptance of current copper prices may have improved, with just-in-time procurement continuing. Market structure side, the inter-month Contango price spread between futures contracts widened slightly, and suppliers showed a tendency to hold prices firm; meanwhile, some suppliers chose to lower offer prices for shipments to control inventory levels, leading to divergent market expectations for the outlook. Inventory side, SMM data showed that social inventory in the Shanghai area decreased by 5,400 mt WoW from Thursday, while the Jiangsu area decreased by 6,700 mt, with the destocking pace continuing. Overall, under the combined effects of mild demand recovery, support from the price spread structure between futures contracts, and some selling pressure, Shanghai spot copper prices against the 2605 contract are expected to remain at a discount tomorrow.

SMM April 20 update: Guangdong #1 copper cathode spot prices against the front-month contract today: high-quality copper was quoted at a premium of 260 yuan/mt, up 10 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 170 yuan/mt, unchanged from the previous trading day; SX-EW copper was quoted at a premium of 110 yuan/mt, unchanged from the previous trading day. The average price of Guangdong #1 copper cathode was 102,880 yuan/mt, up 840 yuan/mt from the previous trading day, and the average price of SX-EW copper was 102,775 yuan/mt, up 835 yuan/mt from the previous trading day. Spot market: Returning from the weekend, Guangdong inventory continued to decline sharply and had now fallen for 24 consecutive trading days, mainly due to low arrivals. Despite the significant inventory drawdown, rising copper prices dampened downstream restocking enthusiasm, and suppliers could only maintain last Friday's prices, unable to hold prices firm further. Guangdong copper cathode purchasing sentiment today was 2.31, down 0.05 from the previous trading day, and shipments sentiment was 3.6, down 0.03 from the previous trading day (historical data available via the SMM database). Overall, the sharp inventory decline failed to offset rising copper prices. Premiums today remained flat compared with last Friday, and overall trading activity was weak.