Shanghai copper prices rise, demand is suppressed, monthly spread and source competition suggest prices may stabilize

Looking ahead to tomorrow, from the demand side, the Shanghai copper futures price rose in last night’s trading. Downstream companies’ acceptance of the current price level has fallen noticeably, and intraday purchasing sentiment has cooled, reflecting that high prices are suppressing demand. From the market structure perspective, the next-month Contango spread has widened to 180-110 yuan/ton. The price-holding sentiment among holders has become apparent, and their willingness to ship out remains low, which provides some support to spot discounts. In terms of regional supply, consumption demand in northern areas such as Gansu, Shanxi, and Henan has weakened. Some smelters have resumed shipments to the Shanghai region; going forward, spot supply sources that are available for circulation in the East China market may increase, which could exert potential downward pressure on spot discounts. On the inventory front, SMM data shows that social inventories in Shanghai recorded 188.0 thousand metric tons, down 0.28 thousand metric tons month-on-month. The pace of destocking has clearly slowed down, and current copper prices have relatively weak appeal to downstream buyers. Overall, amid the interplay between support from the month-spread structure and expectations of a return of northern sources, it is expected that tomorrow’s Shanghai spot copper quotation against the 2605 contract will remain at the current level. (SMM)