China Desk Digest 2026-10-04

Palm Oil Spread Re-Expands as Decline Accelerates

Palm oil futures saw their average spread widen back to -112.90 CNY/t on Oct 4, flipping from negative narrowing to renewed expansion (SunSirs, 2026-10-04). The shift signals that the downward move is not stabilizing; the pace of decline widened again through the session. For desks running spread books, a re-expanding negative spread argues against fading the sell-off. The M10-M20 gap reflects persistent near-month pressure rather than a one-day wobble. Watch whether the expansion persists into the next session or stalls.

Thermal Coal Spread Narrows, Gains Lose Steam

Thermal coal's average spread compressed to 4.05 CNY/t on Oct 4, turning from positive expansion to narrowing (SunSirs, 2026-10-04). The change points to slowing upside momentum and a possible turning point in the recent rally. Traders long the front of the curve should note that the spread's contraction weakens the case for continued near-month strength. A narrowing positive spread often precedes consolidation rather than extension. Confirmation will come from whether the spread holds above zero or slips into negative territory.

China Coal Port Arrivals Rise Week on Week

China's coal port arrivals reached 8.28 million mt last week, up 3% WoW but down 13% YoY (SMM_EN, 2026-10-04). The weekly rebound suggests improving near-term supply flow into ports, even as the annual comparison remains deeply negative. For physical desks, the WoW gain may ease immediate cargo tightness, while the YoY drop keeps the broader supply picture constrained. The mixed signal matters for timing procurement and for reading how quickly inventories rebuild. Monitor next week's arrivals to see if the uptick extends.

SHFE Copper Holds Steep Backwardation Into Quarter-End

SHFE copper's front-month spread stood at 800, a 0.73% backwardation, as of 2026-09-30 (China domestic curve, as of 2026-09-30). The structure keeps the near month at a premium, signaling tight nearby availability for domestic buyers. The main month stayed at 2611 with no roll, so positioning has not yet shifted forward. For traders, sustained backwardation supports carrying long near-month exposure but raises the cost of rolling. The steepness of the curve remains the key tell for physical demand into the new quarter.

Yangshan Copper Premiums Flat at Quarter-End

Yangshan copper warrant and bill premiums were unchanged on 2026-09-30, with warrants at 119.00 and bills at 114.00 (Yangshan copper premium, as of 2026-09-30). The flat readings indicate no fresh impulse in import demand as the quarter closed. Combined with the domestic backwardation, the steady premiums suggest the market is balanced rather than scrambling for material. Traders tracking import arbitrage will see little incentive shift from these levels. Any move in either premium would be the first sign of changing physical appetite.

Data provenance

• China domestic term structure (M1-M2 spread, main contract) as of 2026-09-30
• Yangshan copper premium (USD/t) as of 2026-09-30
• China headlines, 2026-10-04
• English-native China flashes — SMM_EN / Mysteel_EN, 2026-10-04