SMM Daily Review - 2010/1/4 Copper Market

SHANGHAI, Jan. 5 (SMM) -- On Monday, SHFE copper market advanced above RMB 60,000/mt, with prices generally moving above the daily average for the day. SHFE 1004 copper contract hit a new high of RMB 60,710/mt, while prices closed lower at RMB 60,030/mt due to a falling A-shares market. Positions continued to grow, up by more than 16,000 lots, with trading value exceeding RMB 86.2 billion, and trading sentiment was brisk. Although SHFE current month copper contract ended lower at RMB 59,930/mt, the settlement price for the day was RMB 60,090/mt, suggesting prices were largely moving above the price level, which was 1% higher than a day earlier for most time of the day. SHFE current month copper contract reached as high as RMB 60,200-60,250/mt in the afternoon session. SHFE copper market now features a stronger nearby-month contract and weaker forward-month contract, providing a chance to hedge forward-month contracts.

In the spot market, copper supply was limited amid bullish sentiment, with narrower discounts. Discounts for goods from Jiangxi Copper were negative RMB 150/mt. Imported high-quality copper kept discounts firm within negative RMB 200/mt. Discounts for standard-quality copper were around negative RMB 220/mt. Cargo-holders showed strong unwillingness to move goods. Deals were made in the RMB 59,900-60,050/mt in the morning, and traded prices were up to RMB 59,950-60,100/mt in the afternoon following higher SHFE copper market. Market reported brisk inquiries, though downstream producers were hesitated to make purchases when prices hit RMB 60,000/mt.

SMM believes spot copper prices will continue to consolidate at RMB 60,000/mt, but upward momentum remains. Spot copper prices will test RMB 62,000/mt after stabilizing at RMB 60,000/mt, with spot discounts expected to narrow in response. 

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