GLOBAL COPPER WRAP: Shanghai premiums record year-low on arbitrage loss, backwardation

Shanghai copper premiums fell to their lowest in over a year on Tuesday December 4 after a negative arbitrage and slack demand reduced buying activity; elsewhere, the US market is concluding annual contracts with higher premium levels inked in for next year.

  • Shanghai premiums drop to lowest since October 2017 
  • US annual premiums show year-on-year increase 
  • European spot premiums flat despite Aurubis disruptions

Shanghai premiums fall to lowest since October 2017
The grade A copper premium cif Shanghai fell to its lowest level on the midpoint since October 2017 on Tuesday due to sustained arbitrage loss for imports between London and Shanghai as well as a wide backwardation on the London Metal Exchange cash/three-month spread.
Fastmarkets assessed the grade A copper cathode premium on a cif Shanghai basis at $60-75 per tonne, down from $70-83 per tonne a week prior. On September 10, the grade A copper cathode premium cif Shanghai was $100-120 per tonne.
Market participants attributed the unilateral downward movement to a widening loss for copper cathode imported to China and a persistent backwardation in the LME’s cash/three-month spread.

The import arbitrage loss between...


Ellie Wang

Archie Hunter

Dalton Barker

December 05, 2018

12:39 GMT

London, Chicago, Shanghai