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SMM Daily Review - 2010/1/11 Copper Market
Jan 12,2010 11:00CST
smm insight

SHANGHAI, Jan. 12 (SMM) -- SHFE copper market advanced further after a higher open, with prices moving narrowly around the daily average moving. SHFE three-month copper contract closed at RMB 62,170/mt after opening higher at RMB 62,520/mt, up 2.76%. Positions edged up by 656 lots, with turnover rate of 200%, and trading value reported at RMB 97.1 billion. SHFE 1005 copper contract reported an increased of 15,252 lots in positions on Monday, and trading value was expanding to near RMB 27 billion. Positions for the SHFE 1005 copper contract will grow further as the week progresses. SHFE 1005 contract copper prices reached as high as RMB 62,860/mt, with prices ending up 2.94% at RMB 62,420/mt. SHFE current month contract copper prices met resistance at RMB 62,000/mt, with stable performance at RMB 61,000/mt, and prices largely moved in the RMB 61,400-61,550/mt range.

In the spot market, discounts were in the negative RMB 100-200/mt range, and imported copper dominated market supply, since the price ratio of above 8.1 created incentives for imports. In face of low buying interest in the morning trade, cargo-holders took the initiative in lowering discounts to promote sales, with discounts for imported high-quality copper expanding to negative RMB 150-200/mt. Discounts for domestic standard-grade copper were forced to lower to negative RMB 200/mt. Traded prices of high-quality copper during the day were in the RMB 61.350-61.500/mt, and prices for standard-quality copper were RMB 61,250-61,400/mt. Market reported mixed views towards future copper prices, hoping price declines over the past weekend could end the previous wild performance. In the consuming market, demand for building stock exists at the beginning of the year, and for the coming Chinese New Year holiday as well. Buyers are waiting for reasonable market corrections, and enter the market for stock replenishment.

This week is the last trading week before the delivery date for 1001 copper contract begins, and spot discounts will narrow gradually as a result. SMM believes spot copper prices will see limited downward room, with prices expected to move in the RMB 61,000-62,000/mt range.


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