The sentiment of selling goods at month-end is evident, Shanghai spot copper prices are falling, and the contango structure supports the downside room for premiums [SMM Shanghai spot copper]

SMM News on July 28:

       Today, SMM #1 copper cathode spot prices against the front-month 2508 contract were quoted at a premium of 50-140 yuan/mt, with an average premium of 95 yuan/mt, down 30 yuan/mt from the previous trading day. The SMM #1 copper cathode price range was 78,950-79,200 yuan/mt. In the morning session, the SHFE copper 2508 contract surged from around 78,880 yuan/mt, briefly touching 79,080 yuan/mt before starting to decline. As the month-end approached, significant position reductions were observed in the front-month contract. The futures market declined, and the contango structure narrowed, trading at C40-C20 yuan/mt in the morning session.

       Spot premiums fell during the day, mainly due to the arrival of both domestic and imported shipments over the weekend, with additional domestic supplies expected this week. As the month-end approached, suppliers had a need to sell for cash, resulting in significant selling pressure on spot copper. Despite an increase in downstream purchasing sentiment due to the day's copper price decline, selling sentiment suppressed spot premiums for SHFE copper. Mainstream standard-quality copper traded at a premium of 50-90 yuan/mt for cargoes with invoices dated next month in Changzhou, while cargoes with invoices dated next month in the region traded at a premium of 20-60 yuan/mt. High-quality copper, which had been in short supply, traded at a premium of 100 yuan/mt for cargoes with invoices dated next month. The price spread between non-registered and registered copper narrowed, while SX-EW copper remained in short supply.

        Looking ahead to tomorrow, it is expected that there will be further room for spot premiums for SHFE copper to decline. However, given the contango structure, suppliers have a strong willingness to sell at a discount, limiting the downside room for spot premiums.