Price spread narrows between lead spot, futures

Published: Jul 17, 2018 16:57

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The spread between spot lead and the most liquid SHFE contract narrowed as smelters widened discounts against the Jul contract

SHANGHAI, Jul 17 (SMM) – The price spread between spot lead and the most liquid SHFE contract narrowed this week as smelters widened their discounts against the July contract as the delivery date approached, SMM believes.

As of 11:00 CST on Tuesday July 17, the August contract stood at 18,785 yuan/mt while the SMM1# was assessed at 19,300 yuan/mt. The price spread stood at 515 yuan/mt, compared to over 1,000 yuan/mt during June 28-July 13.

Smelters were keen to offload their cargoes and lowered their discounts, when the delivery date approached, in anticipation of weak spot prices in the short term. After the July contract expires, the price spread between spot cargoes and the most liquid contract is set to narrow when spot prices are offered against the August contract. As prices of futures weaken, spot prices are unlikely to recover their losses in the short term.

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