Backwardation Spread Widened Sharply, Shanghai Spot Copper Discounts Expanded Rapidly [SMM Shanghai Spot Copper]

SMM News on August 13:

In early trading, the SHFE copper 2608 contract moved in a sideways consolidation, with the overall center edging lower. It opened at 108,300 yuan/mt, then edged up after the open to an intraday high of 108,470 yuan/mt. Prices subsequently traded largely between 108,150 yuan/mt and 108,450 yuan/mt, with the overall center edging lower, and closed at 108,300 yuan/mt. The Back price spread between futures contracts for the next month traded between 600 yuan/mt and 750 yuan/mt. The import profit margin for SHFE copper against the 2608 contract for the current month ranged from a loss of 1,290 yuan/mt to a loss of 1,060 yuan/mt.

Intraday, the selling sentiment for copper cathode in Shanghai was 3.39, up 0.23 MoM, while purchasing sentiment was 2.91, up 0.04 MoM; historical data can be queried in the database. Early in the session, suppliers quickly lowered their offers multiple times. Opening offers for standard-quality copper were around discounts of 80 yuan/mt to 50 yuan/mt, after which suppliers rapidly cut offers to discounts of 150 yuan/mt to 120 yuan/mt, and then further to around discounts of 250 yuan/mt to 200 yuan/mt. Entering the second time window, suppliers continued to edge down offers to spur deals, and some market participants began buying low-priced cargoes at around discounts of 300 yuan/mt. High-quality copper was scarce, with only some Jintun large plates circulating, so offers stayed firm at parity, with actual deals at around discounts of 50 yuan/mt. Registered SX-EW copper was also scarce, with only some BMKMOOK circulating, and traded at a discount of 280 yuan/mt. Non-registered copper traded at discounts of 350 yuan/mt to 320 yuan/mt.

Looking ahead to tomorrow, SMM recorded social inventory in Shanghai at 79,300 mt, up 1,000 mt WoW from this Monday; social inventory in Jiangsu stood at 18,100 mt, flat WoW from this Monday. Overall inventory in east China edged up, and spot supply has not shown a clear tightening. With delivery approaching, the Back price spread between futures contracts for the next month further widened to 600 yuan/mt–750 yuan/mt. Higher contract rollover costs prompted some suppliers to accelerate spot sales, and offers against the 2608 contract accordingly fell rapidly. Meanwhile, some deliverable-brand cargoes moved into the warrant channel, further differentiating spot cargo flows. After intraday discounts widened to around 300 yuan/mt, some market participants began to purchase, but transactions clearly favored cargoes with lower prices, higher brand recognition, or those meeting their own production needs. Downstream buyers had ample options and applied stricter screening on brands and prices, while actual end-use demand has yet to show a clear improvement. As delivery nears, some suppliers have attempted to shift to offering against the 2609 contract, with offers around premiums of 400 yuan/mt, and the market may gradually enter a phase where both the 2608 and 2609 contracts serve as dual benchmarks in parallel. It should be noted that the apparent rise in premiums after the contract rollover mainly stems from a switch in backwardation spreads, rather than a real strengthening of spot supply-demand fundamentals. Overall, if quotes continue to be made against the 2608 contract, spot prices may remain at a relatively deep discount; as the pricing basis gradually shifts to the 2609 contract, quotes will recover noticeably, though divergence in trading activity among brands is expected to persist.