Spot Copper Quotes in Shanghai to Rise Before Falling After Delivery Of SHFE May Copper Contract

SMM reported that #1 copper cathode traded with premiums of 50-90 yuan/mt against SHFE 2305 copper contract on May 5, and with premiums of 0-80 yuan/mt over the contract on May 12 Spot premiums fell initially and then rose last week, affected mainly by SHFE copper prices and the price spread between the SHFE front-month and next-month contracts. Market uncertainties over copper prices have kept downstream buyers and end-users cautious in purchasing. Therefore, downstream buying interest improved amid lower copper prices but they did not restock excess inventories.

According to SMM statistics, social inventories in mainstream Chinese markets declined noticeably last week. Inventories in Shanghai fell by 9,100 mt due mainly to fewer arriving shipments of domestic cargoes and increased shipments leaving warehouses. At the end of the week, the spot premiums expanded, and the backwardation of the SHFE front-month copper contract over the SHFE next-month copper contract exceeded 200 yuan/mt. After delivery of the SHFE May copper contract this week, spot premiums should rise before falling.   

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