Copper prices have continued their upward trajectory, exerting pressure on spot market activity for electrolytic copper. Transactions were limited as high prices and wide contangos dampened downstream purchasing interest across major markets.
Shanghai Market
At the market open, the transition from the July to August futures contract was underway. With the near-month contango (Back structure) at elevated levels, holders were cautious in their pricing. Some offered standard-grade cathode (flat copper) for the August contract at a premium of 400 yuan/ton, while high-grade cathode (good copper) was offered at premiums of 410-450 yuan/ton. However, as copper prices climbed further, downstream buyers remained hesitant, leading to sluggish spot transactions. By the second trading session, some holders lowered their offers to stimulate sales. Standard-grade cathode premiums fell to 340-370 yuan/ton, and high-grade cathode premiums dropped to around 380 yuan/ton. Despite this, downstream buying interest remained weak, with only a few companies making essential purchases at lower prices. Standard-grade cathode ultimately traded at premiums of 300-340 yuan/ton, with mainstream brands settling around 350-360 yuan/ton. High-grade cathode saw limited transactions at higher premiums, such as the Jinchuan brand trading in small volumes at a 380 yuan/ton premium.
Guangdong Market
Copper prices trended higher today, with the overall price level rising compared to the previous session. Morning spot premiums for the July contract ranged from a discount of 20 yuan to a premium of 0 yuan/ton, while premiums for the August contract were quoted at 200 yuan/ton. Approaching the contract rollover, the widening contango structure prompted market participants to adopt a wait-and-see approach. Sellers generally held firm on prices. With copper prices fluctuating higher during the week, downstream enterprises reported few new orders. Production is primarily supported by existing backlog, downstream demand is weak, finished product inventories are increasing, and short-term operating rates continue to decline, resulting in an overall subdued trading atmosphere.
Tianjin Market
The supply of spot electrolytic copper in the North China region has continued to tighten recently. Concentrated maintenance at several smelters in Shandong has further highlighted the supply shortage, with arrivals in Tianjin and Hebei markets also remaining low. However, the sharp rise in copper prices, coupled with the approaching contract rollover and the expanding contango, has led to weak demand. Consequently, spot premiums are under downward pressure. Downstream manufacturers are purchasing based on essential needs only, with limited new orders. Buying is more focused on meeting immediate requirements when prices dip, with long-term contract deliveries forming the bulk of activity. The overall trading environment remains poor.
Chongqing Market
Transactions in the Sichuan-Chongqing region were weak today. With copper prices and the spreads between near and distant contracts rising across the board, downstream copper plants maintained a strong wait-and-see stance. Most holders, constrained by limited spot availability, generally raised their premiums. Although a few holders attempted to lower premiums to encourage deals, the combination of high contango and high copper prices made it difficult to conclude transactions.
Transaction Overview
On July 15th, based on a Mysteel survey of 56 domestic electrolytic copper trading enterprises (including smelters, traders, and downstream processors), the spot transaction volume for electrolytic copper was 14,000 tons. This represents a decrease of 700 tons from the previous trading day, down 5.19%. During the transition from the July contract, with the near-month contango structure running high and copper prices rising, downstream purchasing sentiment remained weak, leading to a slight overall decline in transaction volume.
Exchange Rate Movement
On July 15th, the central parity rate of the Chinese yuan against the US dollar was set at 6.791 yuan, an appreciation of 80 basis points.
Market Outlook
Overall, with the contract rollover in progress and the contango at high levels, the market trading atmosphere is weak, and spot premiums continue to face downward pressure. Looking ahead to tomorrow, some imported copper shipments are expected to arrive, but domestic supply arrivals will remain constrained. However, given the current high copper prices and declining downstream purchasing demand, it is anticipated that spot premiums will likely trade around the 300 yuan/ton level.
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