Social inventory at historic highs, increased supply causing Shanghai copper spot discount to continue widening

Looking ahead to tomorrow, the Shanghai copper spot discount is expected to continue under pressure. Although intra-day trading sentiment has slightly improved, with some downstream companies resuming work and production and gradually entering the market for inquiries and purchases, the overall market remains constrained by ongoing supply increases. From a market structure perspective, the next-month contango spread remains between 420-350 yuan/ton, with holders continuing to deliver, further diverting spot liquidity; at the same time, both imported and domestic copper continue to arrive, while downstream companies have not fully resumed work and production, leading to a mismatch between supply and demand and a continued accumulation of social inventories. According to SMM, domestic electrolytic copper social inventories in major regions continue to accumulate after the holiday, reaching a total of 531,700 tons, a historic high. Additionally, unmatched delivery warehouse receipts are flowing out, further pressuring the spot premium and discount. Overall, the market is in the early stage of rebalancing supply and demand after the holiday. Under supply pressure, the spot discount is expected to remain under pressure tomorrow.