LME Base Metals Cash to 3-Month Backwardation/Contango (2017-9-7)

[SMM SHFE Copper Spot] Looking ahead to tomorrow, SMM recorded social inventory of 76,100 mt in Shanghai, down 900 mt MoM; Jiangsu’s social inventory stood at 20,500 mt, up 400 mt MoM. Inventory in east China saw a slight destocking overall, providing some support to spot premiums. Meanwhile, with the export window for copper cathode having opened, according to SMM, some suppliers have already started organizing shipments for export. If actual exports increase in the future, this may divert some of the spot cargo available in China. However, SHFE copper prices remain at elevated levels, and downstream real consumption is performing poorly. Standard-quality copper quotations were lowered multiple times during the day, but transactions still did not improve significantly, with market purchases remaining largely need-based. Overall, against the backdrop of slight destocking and export demand providing support, but persistent weakness in domestic consumption continuing to weigh, Shanghai spot copper against the SHFE copper 2608 contract is expected to remain at a premium tomorrow, with its overall center likely to stabilize at a low level. Attention should be paid to the actual volume of outflows of export shipments.

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