Shanghai spot copper quotes shifted rapidly from a premium to a discount this week. At the start of the week, typhoon weather disrupted cargo pick-up and transportation at some warehouses in east China, reducing cargo movement efficiency and offering brief support to spot premiums; however, as delivery approached, the backwardation between adjacent contract months widened sharply, suppliers’ contract rollover costs rose significantly, and their willingness to sell increased accordingly. Standard-quality copper quotes slid quickly from a premium at the start of the week to around a discount of 300 yuan/mt. Meanwhile, SHFE copper prices stayed high, end-use demand remained weak, and trading in lower-priced non-registered copper was relatively active, but this failed to drive a marked improvement in overall buying. On the inventory side, Shanghai social inventory came in at 79,300 mt, up 1,000 mt from this Monday; Jiangsu social inventory came in at 18,100 mt, unchanged from this Monday, and spot supply has not yet tightened notably. Looking ahead to next week, delivery and contract rollover will continue to dominate spot quotes. If the market continues to quote against the SHFE copper 2608 contract, the wide backwardation between adjacent contract months and suppliers’ selling pressure may keep spot quotes at a deep discount. As the pricing basis gradually shifts to the SHFE copper 2609 contract, spot quotes will show a marked recovery; however, this apparent rise in premiums mainly stems from the switch in contract price spreads and does not signal a genuine strengthening in spot supply and demand. From the demand side, high copper prices will continue to limit downstream purchasing volumes, and the market is expected to see persistent need-based buying; low-priced cargoes and cargoes from brands with higher recognition may be relatively favoured. Overall, Shanghai spot copper quotes are expected to shift to a premium against the SHFE copper 2609 contract next week, but the actual transaction price center will remain under pressure from weak end-use consumption, and price spreads between brands and divergence in transaction activity may continue to widen.

SMM Morning Meeting Minutes: Overnight, LME copper opened at $14,230/mt, drifted higher early in the session to touch a high of $14,262/mt, then the copper price center shifted straight down, dipping to $14,096.5/mt near the end of the session, and finally closed at $14,109.5/mt, down 0.31%. Trading volume reached 16,900 lots, while open interest reached 263,000 lots, up 1,892 lots from the previous trading day, reflecting an increase in short positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,610 yuan/mt, immediately touched a high of 109,730 yuan/mt early in the session, then the copper price center drifted lower, dipping to 107,730 yuan/mt near the end of the session, and finally closed at 107,780 yuan/mt, down 0.36%. Trading volume reached 34,000 lots, while open interest reached 212,000 lots, down 2,364 lots from the previous trading day, reflecting a decrease in long positions.

[SMM Shanghai spot copper] Looking ahead to tomorrow, as delivery approaches, the inter-month backwardation has further widened to above 300-400 yuan/mt. The cost of contract rollover rises accordingly for suppliers, and their willingness to sell spot copper increases, significantly capping premiums against the front-month contract. Today, sentiment in sales and procurement improved somewhat from yesterday, but as the SHFE copper price center rose above 108,000 yuan/mt, downstream users still mainly made just-in-time procurement, showing limited acceptance of high-priced offers. Meanwhile, some standard-quality copper has fallen to a discount of 10 yuan/mt to near parity, discounts for non-registered copper have widened further, and low-priced sources continue to weigh on mainstream standard-quality copper quotes. Overall, driven by the widening backwardation spread, increased willingness to sell among suppliers near delivery, and high copper prices suppressing consumption, the price center of Shanghai spot copper quotes against the 2608 contract is expected to continue to shift lower tomorrow, possibly showing a discount.

This week, SHFE copper spot premiums showed an overall rapid pullback. At the start of the week, the monthly procurement cycle began, restocking demand from some downstream players and traders was released, and spot premiums rebounded slightly. However, as SHFE copper prices continued to rise, copper prices significantly suppressed end-user procurement, and market transactions gradually weakened. After mid-week, suppliers continuously lowered their quotes to boost transactions, and the premium center for standard-quality copper moved down rapidly. Meanwhile, low-priced non-registered copper entered the market, exerting some pressure on quotes for registered standard-quality copper. Toward the weekend, although some downstream players made just-in-time procurement, leading to improved transactions, overall demand release was limited. On the inventory front, SMM data showed that on August 7, social inventory in Shanghai stood at 76,100 mt, edging down from the start of the week; inventory in Jiangsu stood at 20,500 mt, with limited overall inventory changes. Looking ahead to next week, SHFE copper spot premiums are likely to gradually shift to discounts. Supply side: Although currently available cargoes are not significantly loose and supply for some brands remains tight, as delivery approaches, some suppliers need to shift positions, and the circulation of low-priced cargoes in the market may increase. Meanwhile, the inter-month backwardation spread may widen further, which could also boost suppliers’ willingness to sell. Demand side: With copper prices remaining high, downstream purchases are still mainly based on just-in-time needs, acceptance of high premiums is limited, and there is little room for procurement volumes to expand. Overall, under the combined effect of high copper prices suppressing consumption, increased cargo circulation as delivery nears, and a widening backwardation spread, spot prices for SHFE copper against the SHFE copper 2608 contract are expected to gradually shift to discounts next week. The extent of the discount will need to monitor changes in the inter-month spread and the flow of cargoes in the market.

[SMM Shanghai Spot Copper] Looking ahead to next week, with delivery approaching, Shanghai spot copper prices continue to rise, and the backwardation spread between nearby and next-month contracts shows signs of further widening. Some suppliers face the need to roll positions, which may drive an increase in low-priced available cargoes, exerting some pressure on spot premiums. Intraday, ahead of the weekend, some downstream buyers made just-in-time procurement, while some enterprises had demand for invoices. Market transactions improved from yesterday, and although suppliers still lowered their offers, the overall price reduction was limited. Supply side, currently available cargoes have not become significantly looser, and the circulation of some brands is limited, providing some support to the downside of premiums. Overall, against the backdrop of position rolling pressure near delivery, widening price spreads between futures contracts, and just-in-time procurement by downstream buyers, Shanghai spot copper prices against the SHFE 2608 contract are expected to trade at a discount next week. The discount magnitude will depend on the movement of the spread and the flow of market supply.

SMM Morning Meeting Minutes: Overnight, LME copper opened at $14,268/mt, touched a high of $14,270/mt shortly after opening, then consolidated and pulled back, falling to a low of $14,055/mt, before closing at $14,092.5/mt, a decline of 0.40%. Trading volume was 27,800 lots, while open interest increased to 254,000 lots, up 1,610 lots from the previous trading day, with bears adding positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,130 yuan/mt, reached a high of 108,250 yuan/mt, fell to a low of 107,310 yuan/mt, and finally closed at 108,160 yuan/mt, a gain of 0.36%. Trading volume was 100,100 lots, while open interest decreased to 214,300 lots, down 2,426 lots from the previous trading day, with bears reducing positions.

[SMM SHFE Copper Spot] Looking ahead to tomorrow, SMM recorded social inventory of 76,100 mt in Shanghai, down 900 mt MoM; Jiangsu’s social inventory stood at 20,500 mt, up 400 mt MoM. Inventory in east China saw a slight destocking overall, providing some support to spot premiums. Meanwhile, with the export window for copper cathode having opened, according to SMM, some suppliers have already started organizing shipments for export. If actual exports increase in the future, this may divert some of the spot cargo available in China. However, SHFE copper prices remain at elevated levels, and downstream real consumption is performing poorly. Standard-quality copper quotations were lowered multiple times during the day, but transactions still did not improve significantly, with market purchases remaining largely need-based. Overall, against the backdrop of slight destocking and export demand providing support, but persistent weakness in domestic consumption continuing to weigh, Shanghai spot copper against the SHFE copper 2608 contract is expected to remain at a premium tomorrow, with its overall center likely to stabilize at a low level. Attention should be paid to the actual volume of outflows of export shipments.

SMM Morning Brief: Overnight, LME copper opened at $13,992/mt, dipped to $13,975.5/mt in early trading, then drifted higher to hit a high of $14,150/mt, before eventually settling at $14,148.5/mt, up 0.75%. Trading volume stood at 20,200 lots, and open interest increased to 253,000 lots, up 1,896 lots from the previous trading day, as bulls added positions. Overnight, the most-traded SHFE copper 2609 contract opened at 107,350 yuan/mt, with an intraday high of 107,840 yuan/mt and a low of 107,300 yuan/mt, and settled at 107,770 yuan/mt, up 0.40%. Trading volume was 38,600 lots, while open interest fell to 214,000 lots, down 2,688 lots from the previous trading day, as bears reduced positions.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, today the SHFE copper price center rose further above 107,000 yuan/mt. High copper prices significantly dampened downstream purchases, and the market was still dominated by rigid demand buying. However, suppliers’ willingness to sell strengthened, and they continuously lowered their offers throughout the day to facilitate deals. As standard-quality copper prices pulled back, downstream purchase willingness improved, and some low-priced cargoes were traded gradually. Meanwhile, available cargoes of high-quality copper and registered SX-EW copper remained scarce, with relatively firm offers providing some support to spot premiums. Overall, against the backdrop of high copper prices suppressing demand and active price cuts by suppliers to sell, Shanghai spot copper prices against the SHFE 2608 contract are expected to remain at a premium tomorrow. The overall center may continue to be in the doldrums, but improved transactions at low prices may limit the extent of further pullbacks in premiums.

[SMM Shanghai spot copper] Tomorrow, the SHFE copper price center is expected to rise above 106,500 yuan/mt, significantly dampening downstream purchases. Although it is still in the purchasing cycle at the beginning of the month, some downstream users have rigid restocking demand, and purchasing sentiment has slightly rebounded compared to the previous trading day. However, actual purchases remain cautious, with suppliers continuously lowering quotes before transactions were made. Meanwhile, low-priced non-registered copper was traded at a premium of around 50 yuan/mt, and the price spread with registered standard-quality copper further widened, exerting some pressure on standard-quality copper quotes. The backwardation structure between nearby months has narrowed compared to earlier periods, marginally weakening the basis for suppliers to hold prices firm. Overall, under the combined effect of high copper prices dampening downstream purchases, low-priced supply impacting the market, and increased willingness to sell among suppliers, spot copper quotes against the SHFE copper 2608 contract are expected to maintain a premium tomorrow, but the overall price center may shift slightly lower.