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SMM Daily Review - 2011/8/5 Copper Market
Aug 8,2011 09:16CST
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Source:SMM
As LME copper prices plummeted overnight, SHFE 1110 copper contract prices, the most active one, opened down RMB 1,600/mt at RMB 69,940/mt on Friday.

SHANGHAI, Aug. 8 (SMM) –As LME copper prices plummeted overnight, SHFE 1110 copper contract prices, the most active one, opened down RMB 1,600/mt at RMB 69,940/mt on Friday. After opening, most of the longs were forced to close positions due to the touch of stop-loss limit, and panic drop in copper prices prompted capitals to draw from the market. In the afternoon session, given that LME copper prices fell below USD 9,200/mt, SHFE three-month copper contract prices lost RMB 69,000/mt, reaching a low level at RMB 68,530/mt. Finally, SHFE 1110 copper contract prices closed at RMB 68,570/mt, down RMB 2,970/mt, a loss of 4.15%. Positions for SHFE 1110 copper contracts were down 24,272 lots, while trading volumes were up 158,000 lots. With the shorts dominating the market and a downside for the closing, support at the 60-day moving average for SHFE three-month copper contract prices was weak.      

In spot market, as base metals prices slumped and SHFE copper prices opened lower, initial copper offers directly turned into premiums, with offers quoted between positive RMB 0-100/mt. Market players for hedge purpose reported profit-taking, and spot copper premiums failed to hold firm, with offers for standard-quality copper turning into discounts of negative RMB 40-50/mt. Trade prices for standard-quality copper were between RMB 69,500-69,600/mt in the morning business, and RMB 69,550-69,650/mt for high-quality copper. Downstream producers increased buying at low prices, resulting in brisk market transactions. SHFE copper prices continued to fall in the afternoon session, and market sentiment was bearish. In this context, spot copper premiums failed to improve, with price offers between discounts of negative RMB 30/mt and premiums of positive RMB 100, nearly flat with morning levels. The low-end traded prices for standard-quality fell below RMB 69,000/mt, and overall traded prices dropped between RMB 68,800-69,000/mt. Real trading volumes reduced compared to the morning business, and sluggish market sentiment tended to spread. Copper inventories monitored by Shanghai Future Exchange (SHFE) increased by 1,133 mt to 118,200 mt in the week ending August 5th, highlighting the characteristics of a low demand period and cautious trading, despite the buying from downstream producers within the week.   

 

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