[SMM Analysis] the Transformation of Shanghai Copper structure into Contango "Gold, Nine and Silver Ten" may not be beneficial to a good Market

Published: Oct 15, 2019 18:27

Save

Last week, the overall Shanghai copper disk structure was basically maintained at a small Back, but after entering this week, the structure began to turn to near-weak and far-strong Contango, and the near-and far-monthly contract price spread widened, from 10 yuan to about 40 yuan, and even a maximum price difference of about 70 yuan.

SMM, 15 October:

The change of the disk structure is mainly due to the increase of the overall inventory pressure after the National Day holiday in China. As a result of the domestic National Day holiday, a large number of imported copper clearance into the domestic market, and due to the recent import window opened, imports appear profitable, but also attract traders to do import operations. This week, due to the import operation of imported copper, domestic refineries released warehouse stocks after National Day, and the sharp increase in inventories led to a downward rise in the spot market, significantly easing the sentiment of raising prices last week. Today's spot quotation has been reduced from 70-120 yuan / ton to 100 yuan / ton from 70-120 yuan / ton yesterday. Last week, copper stocks rose 16401 tons to 134509 tons month-on-month, and the increase in inventories after the National Day holiday was also significantly higher than last year.

In addition, from the current copper spot market transaction point of view, the overall trading in last week's National Day holiday replenishment, gradually returned to light this week, the downstream response is positive, "gold nine silver 10" consumption expectations are not as ideal as previously thought, although the ring compared with the previous off-season situation has been repaired, but the overall repair situation is not as expected, it is difficult to support the continued strength of contracts in recent months.

At present has entered the fourth quarter, in the consumption gradually enters the off-season, and the smelter production maintains the normal condition, the fourth quarter inventory pressure is expected to be difficult to digest for a short time. Therefore, SMM believes that according to the current market supply and demand structure, the disk structure of Contango will still have room to expand.

(SMM Kwong Chi-si)

Price forecast inventory import and export

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

16 hours ago

"Premier Li Qiang Leads State Council Meeting on Enhancing Effective Investment, Boosting Economic Growth"

Premier Li Qiang presided over an executive meeting of the State Council to study policy measures for promoting effective investment. The meeting noted that promoting effective investment plays an important role in stabilizing economic growth and strengthening momentum for development. It is necessary to innovate and improve policy measures, and intensify efforts to enhance the efficiency of utilizing funds such as central budget investments, ultra-long-term special treasury bonds, local government special bonds, and new-type policy-based financial instruments. In conjunction with formulating and implementing the 15th Five-Year Plan

16 hours ago

"Guided by Xi Jinping Thought, Implement 20th CPC Congress Spirit, Apply New Development Philosophy...

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will thoroughly implement the spirit of the 20th National Congress of the Communist Party of China and the plenary sessions of the Party’s 20th Central Committee, fully and faithfully apply the new development philosophy, strengthen top-level design, build computing power interconnection nodes oriented toward national hub periods, major strategic regions, and key industries, establish a system of computing power interconnection nodes, improve the efficiency and service level of public computing power resources, and promote high-quality development of computing power.

16 hours ago

Indirect Iran-US Nuclear Talks in Muscat Show Progress, Omani FM Mediates Tense but Efficient Discussions

After intensive indirect consultations, the new round of nuclear talks between Iran and the US in Muscat, the capital of Oman, has achieved phased progress. It is reported that during this round of talks, the Iranian and US delegations did not meet directly. Instead, Omani Foreign Minister Badr acted as an intermediary, conveying a series of core proposals, strategic concerns, and policy positions to the other side. The atmosphere at the talks was tense yet efficient. According to preliminary on-site assessments, although both sides continue to negotiate over specific terms, they have reached a consensus on the key objective of "continuing dialogue."

16 hours ago