Spot Premiums of Copper Cathode Slumped to less than 100 yuan/mt due to the Continuous Inflow of Imported Copper

SHANGHAI, Aug 3 (SMM) - On August 3, spot premiums of copper cathode in the Shanghai market were quoted at 60-100 yuan/mt over the SHFE 2208 copper contract, the average premium was 80 yuan/mt, down 160 yuan/mt from the previous trading day. The traded prices of standard-quality copper were 60,110-60,390 yuan/mt, and the high-quality copper was traded at 60,130-60,410 yuan/mt. In the early trading, SHFE copper remained rangebound around 60,150 yuan/mt narrowly.

Spot premiums slumped today due to the continuous inflow of imported copper and the traders’ dumping of goods when the backwardation structure of around 400 yuan/mt aroused panic in the market. Premiums of standard-quality copper stood at over 180 yuan/mt, attracting only a few market inquiries. Owing to the traders’ dumping of goods for cash, the premiums fell rapidly to below 100 yuan/mt, and then a small amount of sources that quoted at premiums of 60 yuan/mt pushed up the trading. At this time, some of the cargo holders intended to raise the premiums to about 100 yuan/mt. The spread between the high-quality copper and standard-quality copper stabilised at 20 yuan/mt, and the overall quotes for high-quality copper stood at 80-120 yuan/mt. Quotes of hydro-copper were 20-50 yuan/mt in the sluggish market.

On the third trading day of August, the premiums collapsed because of the continuous inflow of imported copper. Meanwhile, after the contract dropped from 400 yuan/mt in the backwardation structure to 300 yuan/mt in the backwardation structure, the traders began to dump their goods for cash. As the overhaul in the smelters has ended, and the traders hold the same expectation of the inflow of imported copper, the market shall pay attention to the spread between the front-month and next-month contracts. Before the spread narrows, the premiums may fall further.