SMM Review And Forecast Of Spot Copper Market In Shanghai

There were only three trading days last week due to the Chinese Dragon Boat Festival holidays. Spot premiums soared to the highest for the year (with an average of 630 yuan/mt for SMM #1 copper cathode on June 20) and then fell back (with an average of 460 yuan/mt for SMM #1 copper cathode on June 21). 

Spot premiums exceeded 600 yuan/mt on the back of continuous inventory declines and pre-holiday stockpiling. With the warrants from Guangdong being offered for sale after the delivery of the SHFE June copper contract, spot trading weakened on June 21, the last trading day before the Dragon Boat Festival holidays, pushing down spot premiums from a high level.

The backwardation of the SHFE front-month and SHFE next-month copper contracts expanded from 200 yuan/mt to above 320 yuan/mt last Monday as open interest on SHFE 2307 copper contract increased significantly. Spot premiums should rise this week in view of tight available cargoes of traders for long-term contracts even with inflows of imported copper.