On the last trading day, the high backwardation structure persisted, and overall trading was sluggish [SMM Shanghai spot copper]

SMM July 15:

Today marks the last trading day of the SHFE copper 2607 contract, and SMM continues to quote against the front-month contract. Today, SMM #1 copper cathode spot against the front-month 2607 contract was quoted at a discount of 50 yuan/mt to a premium of 50 yuan/mt, with an average of parity, down 155 yuan/mt from the previous trading day. During morning trading, the SHFE copper 2607 contract consolidated in a narrow range, trending slightly lower overall. The opening price was 105,310 yuan/mt, and after opening, prices largely moved between 105,000 yuan/mt and 105,440 yuan/mt, with the overall price center edging down to a closing price of 105,020 yuan/mt. The backwardation spread between the front-month and the next-month contracts ranged from 290 to 440 yuan/mt, and the SHFE copper import profit margin against the 2607 front-month contract was between a profit of 400 yuan/mt and 580 yuan/mt.

During the day, Shanghai copper cathode selling sentiment was 3.08, down 0.30 day-on-day, and buying sentiment was 2.52, down 0.14 day-on-day. Historical data can be queried in the database. In early morning trading, suppliers made offers against the 08 contract for brands such as JCC, Tiefeng, and Jinchuan ISA Yongchang at premiums of 360-400 yuan/mt. Subsequently, suppliers slightly lowered their offers, with Lufang, JCC, etc. quoted at premiums of 380-400 yuan/mt, and Tiefeng, Jinguan, Jinxin, Jintun PC, etc. at 340-360 yuan/mt. High-quality copper like Guixi and Jintun large plate was quoted at premiums of 400-420 yuan/mt. In the second session, suppliers further lowered their offers, with Jinguan, Jinxin, Tiefeng, etc. gradually seeing deals at a premium of 300 yuan/mt. Registered SX-EW copper traded at premiums of 300-320 yuan/mt, while non-registered copper traded around a premium of 200 yuan/mt.

Looking ahead to tomorrow, open interest in the SHFE copper 2607 contract is currently less than 2,000 lots. The 07 versus 08 contract maintains a relatively high backwardation structure, and after the rollover, the market will officially set prices based on the 2608 contract. On the supply side, social inventory has continued to destock recently, with limited arrivals of both domestic and imported cargoes at some warehouses. The tight spot availability is unlikely to improve significantly in the short term. LME data showed the ratio of cancelled warrants on the LME continued to rise, and combined with the opening of the import window, growth in subsequent import arrivals has improved. SMM has learned that some warrants have been cancelled on the LME and shipped to the Chinese market, with arrivals expected around the end of this month or early next month. On the demand side, downstream acceptance of high premiums was limited, market transactions were subdued, and suppliers had to continuously lower their offers to achieve deals. As SMM always quotes against the front-month contract, spot premiums driven by the backwardation structure experienced a rapid recovery. Taking all factors into account, with the support of the backwardation structure and weakening downstream consumption, Shanghai spot copper premiums against the 2608 contract are expected to remain at a premium tomorrow.