SMM Copper Market Daily Review (2015-6-8)

SHANGHAI, Jun. 9 (SMM) – SHFE 1508 copper contract prices opened at RMB 42,930/mt Friday night and tested a low of RMB 42,790/mt before rising to RMB 43,250/mt. The prices finished the session up RMB 40/mt at RMB 43,080/mt.

The most active SHFE copper contract held firm around RMB 43,150/mt during daytime trading Monday, and finished up RMB 120/mt at RMB 43,160/mt. Trading volumes dropped 86,524 lots and positions were down 8,608.

Spot copper quoted at premiums of RMB 50-90/mt to SHFE 1506 copper contract in Shanghai Monday morning. Traded prices were RMB 43,340-43,380/mt for standard-quality copper and RMB 43,360-43,420/mt for high-quality copper.

The price gap between SHFE 1506 and 1507 copper contracts widened to about RMB 100/mt. Some traders bought spot goods and sold in futures market. Cargo holders in spot market left spot premiums steady. Some downstream producers went bargain hunting as copper prices stabilized, but supply was limited.

As for this week’s price trends, 35% of industry insiders surveyed by SMM are bearish that LME copper will fall to USD 5,850/mt and SHFE copper to RMB 42,500/mt. Technical indicators showed resistance has enhanced after prices fell below several major moving averages, and the lack of buying support will push prices lower. Besides, markets are pessimistic about China’s economic figures due out this week, including the PPI and CPI.

65% see copper prices to move sideways with LME copper at USD 5,880-5,980/mt and SHFE copper at RMB 42,700-43,500/mt. These market players hold that the US dollar index will consolidate given uncertainty over the timing of Fed’s interest rate hike. Meanwhile, China’s stock market will experience increased volatility as investors are diverged on stock market outlook. In addition, although China’s liquidity conditions seem to be ample, funds available for industrial companies remain limited.

In spot markets, cargo holders are holding prices firm on falling stock inventories reported by LME and SHFE, but consumption remains unimproved. In this context, copper prices will be trapped in the current range.