Spot copper offers returned to premiums on smaller backwardation

Published: May 14, 2020 14:09

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Offers of spot copper cathode in Shanghai flipped to premiums on the morning of Thursday May 14 as sellers destocking willingness reduced following the price spread between the SHFE copper May and June contracts narrowed to less than 200 yuan/mt.

SHANGHAI, May 14 (SMM) – Offers of spot copper cathode in Shanghai flipped to premiums on the morning of Thursday May 14 as sellers destocking willingness reduced following the price spread between the SHFE copper May and June contracts narrowed to less than 200 yuan/mt.

At noon, high-quality copper was priced at premiums of 10-20 yuan/mt, against the SHFE May contract, with premiums of standard-grade copper at 10 yuan/mt, and any downsides in the offers were limited. Discounts of hydro-copper, meanwhile, expanded to 50 yuan/mt as of noon from 40-30 yuan/mt in early trades.

The SHFE May contract will expire after the transaction finishes on May 15.

Trading activities between traders weakened Thursday, but a decline in the absolute prices of copper bolstered enquiries and purchases by downstream consumers.

SMM expects premiums of spot copper cathode to rise further if the backwardation structure of the SHFE copper contracts continues to narrow with the May-June contracts price spread reducing to 100 yuan/mt.

The SHFE May copper contract bounced back after dipped to a session low of 43,000 yuan/mt this morning, ending the morning trading hours at 43,170 yuan/mt, up 0.14% on the day.

As of noon on May 14, trades of high-grade copper occurred at 43,110-43,200 yuan/mt with standard-quality copper trading at 43,100-43,190 yuan/mt.

Market commentary Futures movement Spot copper

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