LME Cash-3M Backwardation Widens to $478 as Near-Term Supply Is Tight; Spot Premiums Expected to Rise Sharply After Contract Rollover [SMM Copper Morning Meeting Minutes]

2026.8.18 Tuesday
Futures: Overnight, LME copper opened at $14,320/mt and touched a high of $14,343/mt in early trading. Copper prices then saw their center move lower and dipped to $14,122/mt, before moving sideways to close at $14,130.5/mt, down 0.3%. Trading volume rose to 24,000 lots, and open interest rose to 270,000 lots, up 904 lots from the previous trading day, indicating bears added positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,840 yuan/mt and touched a high of 108,860 yuan/mt in early trading. Copper prices then saw their center fall straight down and hit bottom at 107,740 yuan/mt, before moving sideways to close at 108,070 yuan/mt, down 0.84%. Trading volume rose to 52,500 lots, and open interest fell to 199,000 lots, down 11,525 lots from the previous trading day, indicating bulls reduced positions.
[SMM Copper Morning Meeting Minutes] News:
(1) Driven by expectations around the Trump administration’s tariff decisions, large volumes of copper have continued to flow into the US, tightening supply in other markets globally. Copper prices therefore extended their strong rally and are approaching record highs. According to Bloomberg, LME spot copper premiums against the three-month futures contract once widened to $478/mt, the largest spread since the major short squeeze in 2021. This deep inversion (backwardation) in the futures curve is a typical signal that near-term supply is tight, indicating intensifying competition for spot cargo in the short term.
Spot:
(1) Shanghai: On the morning of August 17, SHFE copper 2608 futures mostly traded between 109,540 yuan/mt and 110,000 yuan/mt, while SHFE copper 2609 futures mostly traded between 109,160 yuan/mt and 109,740 yuan/mt. The Back spread between futures contracts ranged from 220 yuan/mt to 370 yuan/mt, and the import profit margin for SHFE copper against the 2608 contract for the current month was a loss of 3,620 yuan/mt to a loss of 3,300 yuan/mt. In Shanghai, the selling sentiment for copper cathode was 2.89, up 0.33 MoM, while purchasing sentiment was 2.77, down 0.22 MoM; historical data can be queried in the database. Looking ahead to today, SMM data showed that social inventory in Shanghai stood at 80,900 mt, up 1,600 mt WoW from last Thursday; social inventory in Jiangsu stood at 23,200 mt, up 7,800 mt MoM, with a combined inventory buildup of 9,400 mt across the two regions. The buildup was mainly due to the return flow of some imports and arrivals of domestic supply, but part of the inventory has been registered as warrants, leaving limited growth in actually available spot cargo. From the perspective of downstream consumption, intraday copper prices touched 110,000 yuan/mt. According to SMM, some downstream processing enterprises had scheduled maintenance shutdowns, with orders showing a clear contraction; end-users’ acceptance of the current high copper prices continued to weaken, and procurement was mainly driven by rigid demand. After the contract rollover, under the SMM price assessment methodology, today’s spot quotations will officially be based on the 2609 contract. As the contract price spread is expected to be repaired after the rollover, spot premiums against the 09 contract are expected to remain at relatively high levels today, with the premium center moving sharply higher versus yesterday’s premiums against the 08 contract. However, attention should be paid to the potential suppression of spot premiums from subsequent warrant outflows—if warrants are released in a concentrated manner, it will create marginal pressure on high premiums.
(2) Guangdong: On August 17, spot prices against the front-month contract for Guangdong #1 copper cathode were quoted at a discount of 80 yuan/mt to a premium of 20 yuan/mt, with the average at a discount of 30 yuan/mt, up 30 yuan/mt from the previous trading day; SX-EW copper was quoted at a discount of 190 yuan/mt to a discount of 170 yuan/mt, with the average at a discount of 180 yuan/mt, up 20 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 109,625 yuan/mt, up 1,330 yuan/mt from the previous trading day, while the average price of SX-EW copper was 109,475 yuan/mt, up 1,320 yuan/mt from the previous trading day. In Guangdong, the purchasing sentiment index for copper cathode was 2.15, down 0.03 from the previous trading day, and the willingness-to-sell sentiment index was 2.81, down 0.04 from the previous trading day (historical data can be queried by logging into the database). Overall, the price spread between futures contracts on the delivery day remained large and copper prices shot up, leaving few buyers, and spot trades were sluggish.
(3) Imported copper: On August 17, the average warrant price fell $5/mt from the previous trading day to $85/mt (price range: $70-100/mt); the average B/L price fell $5/mt from the previous trading day to $80/mt (price range: $75-85/mt); the average EQ copper (CIF B/L) price fell $5/mt from the previous trading day to $55/mt (price range: $45-65/mt), with quotes referencing cargoes arriving from August to early September.
(4) Secondary copper: On August 17 at 11:30, the futures closing price was 109,900 yuan/mt, up 1,650 yuan/mt from the previous trading day; the average spot premiums were 80 yuan/mt, up 210 yuan/mt MoM from the previous trading day; copper scrap prices rose 600 yuan/mt MoM; the copper scrap selling sentiment index rose to 2.85, while the purchasing sentiment index fell to 1.72; the price difference between copper cathode and copper scrap was 5,533 yuan/mt, up 972 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 2,260 yuan/mt. According to an SMM survey, intraday contract delivery and a sharp rise in copper prices threw copper scrap market quotes into disarray. Scrap utilization enterprises were unwilling to chase the rally and maintained a low-price purchasing strategy, while copper scrap suppliers expected copper prices to continue to rise, showed weak willingness to sell, and overall transactions were relatively weak during the day.

Prices: On the macro front, the US-Iran peace agreement expired, and Iran ruled out the possibility of an extension; Trump likewise said he was not currently seeking to extend the memorandum of understanding, reigniting geopolitical uncertainty in the Middle East. Meanwhile, the market was broadly waiting for policy signals from the US Fed meeting minutes, and copper prices moved sideways at highs within a narrow range. Fundamentally, on the supply side, arrivals of imported and domestic cargoes rebounded slightly, easing tight spot circulation; on the demand side, downstream purchasing sentiment was weak as copper prices shot up again. Inventory-wise, as of Monday, August 17, SMM copper inventories in major regions nationwide increased 15,900 mt WoW to 133,900 mt; total inventories rose 200 mt compared to the same period last year (133,700 mt), with inventory buildup across all regions. Overall, copper prices are expected to hold up well within a narrow range today.
[The information provided is for reference only. This article does not constitute direct advice for investment research decision-making. Clients should make decisions prudently and should not replace their own independent judgment with this information. Any decisions made by clients are unrelated to SMM]