Price spread between futures contracts narrows while backwardation falls; sentiment for SHFE copper purchasing and sales weakens during the day [SMM Shanghai spot copper]

SMM News on June 5:

       Today, spot prices of SMM #1 copper cathode against the current-month 2506 contract were reported at parity to a premium of 180 yuan/mt, with an average quoted premium of 90 yuan/mt, a decrease of 40 yuan/mt from the previous trading day. The SMM #1 copper cathode price ranged from 78,290 to 78,540 yuan/mt. In the morning session, the SHFE copper 2506 contract traded relatively flat, moving between 78,290 and 78,370 yuan/mt. The BACK price spread between futures contracts for the next month had narrowed to 100 yuan/mt, and the import loss for current-month SHFE copper was around 1,300 yuan/mt, prompting some smelters to initiate export activities.

       During the day, price spreads between different spot copper brands persisted. High-quality copper brands such as Jinchuan (plate) and Guixi were quoted at premiums of 150-200 yuan/mt, while brands like Polish (plate) were traded at premiums of 120-150 yuan/mt. Brands such as Xiangguang, Lufang, and JCC were quoted as high as premiums of 170-200 yuan/mt, with a few sporadic transactions of Xiangguang at a premium of 40 yuan/mt, which were subsequently hard to find in the market. Brands like Tiefeng, Yuguang, Jinguan, Jinfeng, Jintun pc, and Dajiang were traded at discounts of 30 yuan/mt to premiums of 20 yuan/mt. Both upstream and downstream selling and purchasing sentiment weakened during the day.

       Looking ahead to tomorrow, after trading at discounts earlier in the day, low-priced cargoes have returned to parity prices. With the current convergence of the price spread between futures contracts and seven trading days remaining until delivery, it is expected that spot transactions will remain stagnant around parity in the short term.