SMM Daily Review - 2011/8/10 Copper Market

SHANGHAI, Aug. 11 (SMM) –As LME copper prices opened higher overnight after stabilizing on the previous trading day, SHFE 1110 copper contract prices opened up RMB 2,170/mt at RMB 67,000/mt on Wednesday. SHFE three-month copper contract prices tried several times to move higher in the morning business, but failed after touching an intraday high RMB 67,360/mt, due to pressures at the daily moving average. Coupled with downside movements in domestic stock markets in the afternoon session, SHFE three-month copper contract prices basically fluctuated below the daily moving average, reaching a low level at RMB 66,550/mt. Since large short-term speculative funds left the market at the tail of trading, SHFE three-month copper contract prices broke the resistance of daily moving average. Finally, SHFE 1110 copper contract prices closed at RMB 67,090/mt, up RMB 2,260/mt, or a gain of 3.49%. Positions for SHFE 1110 copper contracts were down 2,124 lots, and trading volumes were down 144,000 lots, while positions for SHFE 1111 copper contracts were up 8,792 lots, suggesting cautious market transactions, as both the longs and shorts need further confirmation on whether or not SHFE copper prices would extend the rebound.        

In spot market, SHFE copper prices opened more than 4% higher, but market players were still skeptical about the stability of prices, keeping downstream producers cautious towards purchases. In this context, copper offers in the morning business were quoted between discounts of negative RMB 80/mt and premiums of positive RMB 0/mt. Near the midday, some trader’s buying interest slightly increased for high-quality due to discounts and the approach of delivery dates, helping improve transactions for high-quality copper. As a result, offers for high-quality copper gradually turned into premiums of positive 0-20/mt, and spot copper offers were reported between discounts of negative RMB 50/mt and premiums of positive RMB 20/mt. Trade prices for standard-quality copper were between RMB 66,950-67,050/mt, and RMB 67,000-67,150/mt for high-quality copper. Overall transactions were weak. SHFE copper prices were little changed in the afternoon session, and offers were basically flat with morning levels. Traded prices also remained almost the same, and transactions were limited.