SMM Daily Review - 2011/8/19 Copper Market

SHANGHAI, Aug. 22 (SMM) –As the European and American equity markets slid and LME copper prices tumbled overnight, SHFE 1111 copper contract prices, the most active one, opened down RMB 990/mt at RMB 65,980/mt on Friday, with prices fluctuating around the daily moving average during the whole trading day. SHFE three-month copper contract prices mainly fluctuated around RMB 66,200/mt, and the low level was at RMB 65,960/mt. The most actively-traded copper contract prices finally closed at RMB 66,350/mt, down RMB 620/mt or a loss of 0.93%. Positions for the most actively-traded copper contracts were up 16,292 lots, while trading volumes were down 15,698 lots. SHFE three-month copper contract prices declined slower than LME copper prices, and would be supported at RMB 66,000/mt in the near term. Based on daily position holdings from the longs and shorts, shorts were slightly strong. SHFE three-month copper contract prices were expected to fluctuate further.  

In spot markets, SHFE copper prices weakly fluctuated after opening higher, and panic sentiment still dominated the market. In this context, copper premiums failed to increase, reporting at positive RMB 150-250/mt. Trade prices for standard-quality copper were between RMB 66，550-66，700/mt in the morning business, and RMB 66,600-66,800/mt for high-quality copper. Despite buying interest at the lows, downstream producers were still cautious towards trading, hampering market transactions. SHFE copper prices continued to fluctuate in the afternoon session, but spot copper supply reduced compared to the morning session, keeping offers firm. As a result, premiums for high-quality copper increased slightly to positive RMB 250-300/mt, and positive RMB 180-200/mt for standard-quality copper. Traded prices were at RMB 66,600/mt. Traders chose to stay out of the market at high premiums, while downstream producers made purchases on an as-needed basis, bringing market transaction into a stalemate. Copper inventories monitored by Shanghai Future Exchange (SHFE) were down 8,805 mt to 112,014 mt in the week ending August 19th, suggesting purchasing sentiment at low prices by downstream producers.