The BACKWARDATION Structure Widened in the Morning Session, Spot Premiums Dropped Rapidly [SMM SHFE Spot Copper]

Published: Jan 15, 2025 13:36

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[SMM Spot Copper] During the day, mainstream standard-quality copper was quoted at parity to a premium of 110 yuan/mt against the front-month contract, while high-quality copper was quoted at a premium of 10 yuan/mt to 120 yuan/mt. Due to SHFE registered warehouse warrants being less than 10,000 mt, the backwardation structure slightly widened in the early session. Suppliers showed mixed attitudes toward inventory buildup during the New Year, and the market conveyed a sentiment of tight supply. After the transition to the 2502 contract, overall market transactions quickly weakened, and spot premiums are expected to continue declining tomorrow.

SMM January 15 News:

Today, spot #1 copper cathode prices against the front-month 2411 contract were quoted at parity to a premium of 120 yuan/mt, with an average premium of 60 yuan/mt, down 65 yuan/mt from the previous trading day. Standard-quality copper traded at 75,290-75,540 yuan/mt, while high-quality copper traded at 75,310-75,550 yuan/mt. The SHFE copper 2501 contract fluctuated downward during the morning session, initially testing 75,460 yuan/mt before declining to 75,270 yuan/mt by the close. The SHFE copper 2502 contract also weakened in the morning, falling from 75,440 yuan/mt to 75,150 yuan/mt. The price spread between the SHFE copper 2501 and 2502 contracts fluctuated in a BACK structure of 10-80 yuan/mt during the morning session.

Today marked the last trading day for the SHFE copper 2501 contract. During the early session, the inter-month BACK structure widened, and suppliers offered discounts to clear inventory. Initially, mainstream standard-quality copper against the 2502 contract was quoted at a premium of 80-120 yuan/mt, while high-quality copper, such as CCC-P and Jinchuan (plate), was quoted at a premium of 110-140 yuan/mt. At this time, the price spread between the 2501 and 2502 contracts fluctuated around a BACK structure of 20-80 yuan/mt. Standard-quality copper against the SHFE copper 2501 contract showed premiums of 50-80 yuan/mt, while high-quality copper showed premiums of 30-120 yuan/mt.

During the main trading session, suppliers actively sold at higher inter-month spreads, putting pressure on spot premiums. Mainstream standard-quality copper against the 2502 contract was partially traded at premiums of 60-80 yuan/mt, while high-quality copper, such as CCC-P, against the 2412 contract was partially traded at premiums of 80-100 yuan/mt. Downstream buyers mostly maintained just-in-time procurement, and spot transactions showed mediocre performance. At this time, the price spread between the 2501 and 2502 contracts remained basically stable at a BACK structure of 10-80 yuan/mt. Standard-quality copper against the SHFE copper 2501 contract showed premiums of 0-50 yuan/mt, while high-quality copper showed premiums of 20-110 yuan/mt. According to SMM's price assessment methodology for #1 copper cathode, SMM consistently quotes prices based on the front-month contract.

Due to SHFE registered warehouse warrants being less than 10,000 mt, the BACK structure slightly widened during the early session. Suppliers held divergent views on inventory buildup for the New Year, and the market conveyed a sentiment of tight supply. After transitioning to the 2502 contract, overall market transactions quickly weakened, and spot premiums are expected to continue declining tomorrow.

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.

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