LME Base Metals Cash to 3-Month Backwardation/Contango (2017-9-18)

SMM Morning Meeting Summary: Overnight, LME copper opened at $13,231.5/mt, edged up to $13,308/mt in early trading, then drifted lower to touch a low of $13,190/mt, and finally closed at a high of $13,316/mt, up 2.22%. Trading volume was 26,000 lots, and open interest was 248,000 lots, up 306 lots from the previous trading day, indicating that bulls added positions. Overnight, the most-traded SHFE copper 2608 contract opened at 102,180 yuan/mt, edged up to 102,600 yuan/mt, then drifted lower to touch a low of 101,640 yuan/mt, and closed at 102,260 yuan/mt, up 1.03%. Trading volume was 55,000 lots, and open interest was 162,000 lots, down 2,799 lots from the previous session, indicating that bears reduced positions. On the macro front, US PCE data largely met expectations, and the US dollar index halted its three-day rally. Geopolitically, another vessel attack occurred in the Strait of Hormuz; Iran warned that unauthorized transits are "unacceptable," and Israel denied withdrawing troops from southern Lebanon, which heightened Middle East tensions again and pushed geopolitical risk premiums higher. These factors eased rate hike concerns, and the US dollar stopped rising and pulled back, helping copper prices stabilize and rebound.

[SMM Copper Anode Market] As copper prices fell, the price difference between primary metal and scrap narrowed. From June 19-25, the SMM weekly operating rate of domestic scrap-derived copper anode plate producers fell 2.48 percentage points WoW to 47.76%, and is expected to decline 2.49 percentage points WoW next week to 45.27%.