Pre-Delivery Futures Spreads Fully Shift Into Backwardation, Shanghai Spot Copper Premiums Hit Year’s High [SMM Shanghai Spot Copper]

SMM July 10:

Today, the spot premium for SMM #1 copper cathode against the current-month SHFE 2607 contract was quoted at 130 yuan/mt to 180 yuan/mt, with an average of 155 yuan/mt, up 5 yuan/mt from the previous trading day and setting a new high for the year. In early trading, the SHFE copper 2607 contract experienced two rounds of sideways consolidation before rallying. After opening at 103,890 yuan/mt, prices moved mainly between 103,800 yuan/mt and 103,950 yuan/mt, before quickly rising to trade broadly in the range of 103,920 yuan/mt to 104,100 yuan/mt. Following a period of consolidation, prices continued to rise, reaching an intraday high of 104,160 yuan/mt, before edging down toward the close. The closing price was 104,010 yuan/mt. The inter-month backwardation spread ranged from 20 yuan/mt to 90 yuan/mt, while the import profit margin for SHFE copper against the 2607 contract fluctuated between a loss of 30 yuan/mt and a profit of 30 yuan/mt.

During the day, the electrolytic copper sales sentiment in Shanghai stood at 3.28, up 0.08 day-on-day, while the purchasing sentiment was 3.13, down 0.05 day-on-day. Historical data can be referenced in the database. At the market open, suppliers quoted standard-quality copper such as Jinchuan ISA, Zhongjin, and Zijin at a premium of 130 yuan/mt, with quick transactions following. More offers then emerged, with Lufang and Xiangguang quoted at a premium of 150 yuan/mt, and Jinchuan ISA, Tiefeng, Polish small plates, Zijin, and Dajiang HS quoted at premiums of 130 yuan/mt to 150 yuan/mt. High-quality copper such as Guixi and Jinchuan large plates was offered at premiums of 170 yuan/mt to 200 yuan/mt. Non-registered copper was scarce, with offers at parity to a premium of 20 yuan/mt. In the second session, suppliers slightly raised quotes for non-registered copper to a premium of 30 yuan/mt to 40 yuan/mt. Registered SX-EW copper was in tight supply, with brands like SPENCE trading at a premium of 80 yuan/mt to 100 yuan/mt.

Looking ahead to next week, the inter-month spread has fully shifted to a backwardation structure, widening to 20-90 yuan/mt. Suppliers' sentiment to hold back from selling remains strong, and social inventory continues to be rapidly destocked, keeping the pattern of tight available spot supply unchanged. Overall, driven by the backwardation structure, inventory destocking, and supplier reluctance to sell, spot SHFE copper prices against the 2607 contract are expected to maintain a premium next week, extending the overall firm trend. Attention should be paid to changes in market structure around the delivery date and the restocking pace of downstream users.