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SMM Daily Review - 2011/7/15 Copper Market
Jul 18,2011 08:52CST
smm insight
SHFE 1109 copper contract prices, the most active one, opened down RMB 320/mt at RMB 71,700/mt on Friday.

SHAGNHAI, Jul. 18 (SMM) –SHFE 1109 copper contract prices, the most active one, opened down RMB 320/mt at RMB 71,700/mt on Friday, with prices falling after initially increasing during the whole trading day. In the morning business, SHFE three-month copper contract prices tried several times to climb above RMB 72,000/mt after fluctuating around the 5-day moving average of RMB 71,800/mt, but failed due to strong resistance, only advancing to RMB 72,080/mt. In the afternoon session, SHFE three-month copper contract prices virtually remained fluctuating, with prices moving up to RMB 71,900/mt. At the tail of trading, SHFE three-month copper contract prices followed LME copper prices to edge down due to an increasing US dollar index. Coupled with large position closings, SHFE three-month copper contract prices fell further to the daily low-end of RMB 71,600/mt. Finally, the most actively-traded copper contract prices closed at RMB 71,640/mt, down RMB 380/mt or a loss of 0.53%. Positions for SHFE 1109 copper contracts were down 4,516 lots and trading volumes were down by 20,120 lots to 70,146 lots, while total trading volumes of Shanghai Copper Index contracted to about 100,000 lots, reflecting the clear characteristic of short-term investment and unstable market sentiment. Given stable domestic stocks market during the trading day, the trend in SHFE copper prices was slower than that of LME copper prices. With weak support at the 5-day moving average, SHFE three-month copper prices would need a new round of corrections and adjustments before moving up further.

In the spot market, copper discounts continued to reduce although SHFE copper prices moved higher after a low open. As Friday was the delivery date of current-month copper contracts, and since differences between the selling and buying prices for SHFE 1107 copper contracts were big, cargo-holders were mixed towards copper price offers. In this context, the price gap among the same brand of spot copper contracts could reach around RMB 30/mt, and spot copper offers were quoted at discounts of negative RMB 120-0/mt. Traded prices for standard-quality copper were between RMB 71,550-71,600/mt in the morning business, and RMB 71,600-71,700/mt for high-quality copper. Traders made brisk transactions for hedge funds, while downstream producers chose to stand on the sidelines wisely. Copper prices in the SHFE market dropped by nearly RMB 300/mt in the afternoon business. Traded prices for high-quality copper were held firm at morning levels, and offers turned into slight premiums. Traded prices were between RMB 71,500-71,650/mt, but transactions were limited. SHFE announced copper stockpiles increased by 19,963 mt to 109,461 mt in the week ending July 15th, signaling characteristics during the delivery week, and also proved the low buying interest restricted by high spot copper prices.      

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