We anticipate a likely reduction in the Copper cash-to-3M forward contango, currently at $117, potentially narrowing to around $70—a decrease of approximately $50 in the short to medium term. Throughout 2024, the contango has fluctuated between $60 and $160, with a median average of $100.

 The potential drivers for this anticipated contract include:

 1)Physical arbitrage activity, where traders may aggressively purchase spot copper and sell forward contracts, thereby compressing the premium

 2) An expected increase in spot demand is driven by tightness in raw material supply, particularly from the concentrate segment.

 3) A less likely scenario of persistently weak future demand

  4) The impact of large-scale long liquidation in the USD, coupled with recent gains, steady inflation, and lower interest costs.

 Overall, we foresee a narrowing of the Copper cash-to-3M forward premium in the near to medium term, supported by both market fundamentals and technical chart patterns, which indicate a potential move toward the $70 range.

 Traders and physical players may hedge their inventory by booking forwards against their spot purchases, effectively managing price risk. Additionally, they are likely to monitor and respond to the behavior of different LME prompt dates, leveraging variations in spreads and market structure to optimize their forward bookings.