Spot Copper Premiums Collapsed and Fell into Discounts amid Skyrocketing SHFE Copper

SHANGHAI, Oct 11 (SMM) - Spot copper cathode was quoted at discounts of 90-10 yuan/mt over SHFE 2210 today, with an average discount of 50 yuan/mt, down 595 yuan/mt from the previous trading day. SMM #1 copper cathode was reported at 63,860-64,080 yuan/mt, standard-quality copper 63,860-64,040 yuan/mt, and good-quality copper 63,880-64,080 yuan/mt. In early trade, the SHFE 2210 and 2211 contract spread hovered around 1,500 yuan/mt. The 2210 contract opened high at 63,410 yuan/mt, and then climbed 2.5% or more than 1,000 yuan/mt to test 64,100 yuan/mt, and then stayed above 64,000 yuan/mt.       

In the spot market, some standard-quality copper sellers quoted in premiums of 430-450 yuan/mt in early trade to test market response, which was almost flat over good-quality copper. However, with the rising SHFE copper price and the persistently high SHFE contract spread, there was merely any transaction in the spot market. The sellers were less firm to their prices approaching the delivery of SHFE 2210. In the first trading session, premiums of standard-quality copper dived from 260-280 yuan/mt to a discount of about 30 yuan/mt, but the transaction was still muted; the good-quality copper premiums echoed and dived. Into the second trading session, there were still no transactions heard despite spot prices quoted in discounts. The sellers were eager to sell and continued to lower the prices. Near the end of the morning trade, the discounts of standard-quality copper fell below 100 yuan/mt, which finally attracted some buyers.       

The spot traders and downstream fabricators both refrained from purchasing amid surging SHFE copper as well as wide SHFE contract spread today which would raise their cost. The spot premiums fell 20-30 yuan/mt almost every minute after opening today, and the buyers found it difficult to make any decisions in this case. Meanwhile, the downstream players and traders could not accept the fact of a possible squeeze when SHFE copper stood above 64,000 yuan/mt. Now that SHFE 2210 and 2211 contract spread shows signs of expanding, the spot discounts are far from the bottom.