Spot premiums fell initially and then rose last week. In the first half of the week, market participants focused on stock liquidation due to the month-end and mid-year settlement, lowering spot premiums. On Tuesday last week, SMM spot premiums of #1 copper cathode averaged 200 yuan/mt against next-month invoices. In the second half of the week, sellers raised their quotes and spot premiums exceeded 300 yuan/mt against next-month invoices.

SMM data shows that compared with June 21, inventories in Shanghai accumulated 13,200 mt to 62,000 mt. And inventories in the Shanghai bonded area fell 11,100 mt, reflecting shipments of cargoes from bonded zone inventories to domestic warehouses. SHFE copper inventories under warrants were still low and stood at only 18,605 mt as of last Friday. The high spot premiums prevented sellers from registering the cargoes as SHFE warrants.

During the week, the backwardation of the SHFE 2307 copper contract over the SHFE 2308 copper contract rose and exceeded 400 yuan/mt at the week’s end. On the last trading day of June, the backwardation surged to 590 yuan/mt as most speculators of the SHFE 2307 copper contract closed their positions. In early July, spot premiums may return to around 400 yuan/mt.