As contract rollover approaches, the price spread between futures contracts narrows, and spot premiums continue to edge down [SMM Shanghai spot copper]
[SMM Shanghai Spot Copper] Looking ahead to tomorrow, tomorrow is the last trading day of the SHFE copper 2610 contract. Since SMM spot quotes are still based on the front-month contract, as delivery and contract rollover approach, changes in the price spread between the 2610-2611 contracts will directly affect spot premiums. Intraday, the next-month backwardation has narrowed significantly from its earlier high. If the price spread between futures contracts pulls back further, after conversion based on the spread structure, spot premiums against the 2610 contract tomorrow are expected to remain near parity, with a possibility of a slight rebound. Some suppliers have already started quoting against the 2611 contract in advance, with non-registered copper quoted at a premium of around 400 yuan/mt against the 2611 contract. On the supply-demand front, arrivals of domestic cargoes remain relatively limited recently, while purchases by downstream processing enterprises are also mainly need-based, leaving the overall market in a supply-demand weak pattern. Considering that tomorrow marks a key delivery period, spot market trading is expected to revolve more around price spreads between futures contracts and quotes after contract rollover, with close attention needed on open interest in the 2610 contract, warrants, and rapid changes in the next-month backwardation.