LME Base Metals Cash to 3-Month Backwardation/Contango (2017-8-21)

[SMM Shanghai Spot Copper] Intraday SHFE copper prices edged down, effectively activating some downstream buying interest. According to SMM, orders from some downstream processing enterprises increased by approximately 30% compared to the previous trading day, with some transactions concentrated around 103,500 yuan/mt, indicating that current price levels still hold certain appeal for end-users. Inventory side, SMM data showed that social inventory in the Shanghai area registered 181,800 mt, down 2,800 mt WoW from last Thursday; inventory in the Jiangsu area was 38,100 mt, up slightly 1,200 mt WoW from last Thursday. Overall, a mild destocking trend was observed, with inventory pressure easing marginally. From market performance, suppliers' offers remained basically stable, and the transaction center showed no significant downward shift. Overall, supported by demand release stimulated by copper price pullbacks and mild destocking, spot prices against the SHFE copper 2606 contract are expected to remain at a discount tomorrow, continuing a generally stable trend.

Today, #1 copper cathode spot prices in North China against the front-month contract were reported at an average discount of 300 yuan/mt to a discount of 180 yuan/mt, with the average discount of 240 yuan/mt up 30 yuan/mt from the previous trading day. The average transaction price was 103,935 yuan/mt, down 1,440 yuan/mt from the previous trading day.