SMM reported that #1 copper cathode in Shanghai traded with premiums of 0-80 yuan/mt against SHFE 2305 copper contract on May 12, and with premiums of 260-400 yuan/mt over the 2306 contract as of Friday May 19. On the last trading day of the SHFE 2305 copper contract on Monday, the price spread between the SHFE front-month and next-month contracts fluctuated frequently, and the sellers quoted with premiums of around 160 yuan/mt over the SHFE next-month contract. As delivered warrants have not flowed out into the market, and shipments from smelters decreased, social inventories dropped sharply.
Spot premiums rose to above 400 yuan/mt. The backwardation of the SHFE front-month contract over the SHFE next-month contract rose to 200 yuan/mt. But as most downstream buyers took a wait-and-see attitude, spot premium dropped on Friday. This week, with declines in both social inventory and the bonded area inventory, sellers will hold their prices firm. Some traders will look for cheap resources as the delivery for long-term contracts nears. Spot premiums are expected to fall this week.
