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SMM Daily Review - 2011/8/9 Copper Market
Aug 10,2011 09:03CST
price review forecast
Source:SMM
SHFE 1110 copper contract prices, the most active one, opened down RMB 4,060/mt or 6% at RMB 63,560/mt on Tuesday.

SHANGHAI, Aug. 10 (SMM) –As LME copper prices overnight plummeted by more than USD 300/mt due to panic sell-off pressures, opening prices directly fell to USD 8,500 in the morning business on Tuesday. In this context, SHFE 1110 copper contract prices, the most active one, opened down RMB 4,060/mt or 6% at RMB 63,560/mt on Tuesday, and the shorts reported profit-taking soon after the opening. The Shanghai Composite Index broke through 2,500 points and dropped to 2,437 points, and China later announced July’s CPI data set a new record high, adding to market expectations of interest rate hikes. As a result, SHFE three-month copper contract prices fluctuated narrowly around RMB 64,100/mt. In the second trading session, the US dollar index fell back to 74.5 from 74.9, helping LME and SHFE copper prices increase from their initially falling trends. In the afternoon session, SHFE three-month copper contract prices reached a high at RMB 66,030/mt since some longs entered into the market to make bottom fishing, narrowing the daily losses. Finally, the most actively-traded copper contract prices closed at RMB 65,960/mt, down RMB 1,660/mt, or a loss of 2.45%. Trading volumes and positions for the most actively-traded copper contracts were up 130,000 lots and 5,072 lots, respectively. SHFE copper prices experienced a technical rebound on Tuesday, and future price movements will depend on global financial markets’ response to the Fed interest rate discussion meeting held Tuesday evening.        

In spot market, as SHFE copper prices continued to open lower in the morning business, copper premiums increased to positive RMB 150-250/mt, but then reduced to positive RMB 0-50/mt when SHFE copper prices slightly rebounded. Trade prices for standard-quality copper were between RMB 64,450-64,900/mt in the morning session, and RMB 64,500-65,000/mt for high-quality copper. Rapid declines in copper premiums reflected continuous panic sell-off sentiment. Downstream producers remained active in purchasing at low prices, while traders reduced transactions given high copper premiums, small profit margins and declining prices. In the afternoon session, SHFE copper prices advanced again, stimulating market participants for hedge trading to actively move goods. As a result, spot copper offers turned into discounts of negative RMB 100-50/mt. However, some market players with optimistic outlooks actively entered into the market for purchases, quickly pushing offers to premiums of positive RMB 0-50/mt. Traded prices rose to RMB 65,400-65,800/mt, and trading sentiment improved. Daily traded prices fell first, and then increased. Markets were waiting to see whether or not the Fed interest rate discussion meeting held Tuesday evening could ease global investor worries. 


 

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