Shanghai copper premiums have slipped ~$20t over the last week according to Metal Bulletin assessments, to sit at ~$130-150t. This is very similar to the Shanghai Metals market assessment, which is free and can be found
here in the latest price assessments box.
Premiums for physical delivery into China are still high and are much higher than the ~$70/t seen in March 2013. The trajectory, however, is more concerning for those looking for strong Chinese interest to continue to propel prices.
SHFE stocks have continued to rise over the last few weeks and are now back to levels seen around this time last year. By all reports, bonded warehouse stocks are also pretty close to levels seen before destocking began in 2013. This has been facilitated by a draw in LME and Comex inventory, which remain low. But overall it appears that exchange and bonded stocks are rising.
Copper prices have been mostly lower over the past few weeks, and the weakness in LME prices has helped open up the arbitrage into the SHFE.
Its also noticeable that the backwardation in copper prices narrowed sharply on Thursday as cash prices fell further than 3m futures.
If physical market interest from China is waning thanks to higher inventories and slower demand growth then the risk is that copper spreads move back into contango. This may take a little while given the seasonal strength in copper consumption heading into mid-year, but so far the signs are that things are waning rather than strengthening.
