The price spread between futures contracts before delivery has still not narrowed, and downstream players are unwilling to purchase as the premium has declined [SMM spot copper in South China]

SMM, May 14:

Today, spot #1 copper cathode in Guangdong was quoted at a discount of 80 yuan/mt to a premium of 50 yuan/mt against the front-month contract, with an average discount of 15 yuan/mt, a decrease of 60 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 140 yuan/mt to 120 yuan/mt, with an average discount of 130 yuan/mt, a decrease of 40 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 78,955 yuan/mt, an increase of 740 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,840 yuan/mt, an increase of 760 yuan/mt from the previous trading day.

Spot market: Inventory in Guangdong has declined for two consecutive days, reaching a recent low, primarily due to still low arrivals. The combination of rising copper prices and a still large price spread between futures contracts has led to weak downstream restocking demand. Suppliers have had to lower prices to sell, causing premiums to continue to decline. As of 11 a.m., high-quality copper against the front-month contract was quoted at a premium of 50 yuan/mt, standard-quality copper at a discount of 80 yuan/mt, and SX-EW copper at a discount of 130 yuan/mt. We expect a significant improvement only after delivery.

Overall, the price spread between futures contracts before delivery has not narrowed, with downstream players reluctant to purchase amid declining premiums, resulting in overall sluggish trading activity.

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