SHFE/LME Price Ratio Inverts as LME Backwardation Widens

The Shanghai Metals Market reported that the SHFE/LME price ratio has worsened for the second consecutive day, reaching an inverted structure. This indicates a significant imbalance in copper prices between the Shanghai Futures Exchange (SHFE) and the London Metal Exchange (LME). The backwardation structure, which is a measure of the difference between spot and futures prices, also widened on August 26.

Traders have largely lost purchase willingness for September date cargo due to poor downstream demand. However, ongoing port congestion has prevented a sharp collapse in spot premiums. With the export window now open, attention should be paid to subsequent export activities by smelters.

Mainstream quotations for registered warrant B/Ls arriving from late August to early September were heard at 85-95, while those for EQ copper arriving in early September were at $50/mt.