Spot Premiums of Copper Dropped Rapidly on the Last Trading Day of May due to the Financial Pressure

SHANGHAI, May 31 (SMM) - Copper cathode spots in the Shanghai market were quoted at premiums of 260-310 yuan/mt over the 2206 contract today. The average premium was 285 yuan/mt, 85 yuan/mt lower than the previous trading day. Standard-quality copper was traded at 72,550-72,630 yuan/mt, and the high-quality copper was traded at 72,570-72,650 yuan/mt. In the early trading, SHFE copper prices hovered around 72,300 yuan/mt.

In the spot market, premiums dropped rapidly. At the end of May, some traders were eager to gain cash. Besides, the futures spread between the front-month and next-month contracts expanded slightly to over 300 yuan/mt in the backwardation structure, which makes the premiums cannot remain firm. In the early trading, premiums of standard-quality copper stood at over 300 yuan/mt. However, in order to gain cash, traders lowered the premiums quickly to around 270-280 yuan/mt. After sources that were quoted at 260 yuan/mt flowed into the market and the buyers entered the market, the spot premiums stopped falling. The overall spread between high-quality copper and the standard-quality copper remained at around 20 yuan/mt. The market does not prefer high-quality copper amid the high future prices, so the overall premiums of imported sources were lowered to about 280-300 yuan/mt. Spot premiums of hydro-copper stood at 170-200 yuan/mt when the imported sources flowed into the market, and the market mainly purchased on rigid demand.

On the last trading day of May, traders were eager to dump their goods for cash due to the financial pressure. Before the Dragon Boat Festival, due to the risk aversion sentiment, the spot premiums dropped from high. In June, spot premiums may not drop even though the restocking demand approaching the Dragon Boat Festival holiday is not ideal. Spot premiums in Changzhou followed these in Shanghai to drop to  350-450 yuan/mt.

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The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.