SMM Daily Review - 2011/8/23 Copper Market

SHANGHAI, Aug. 24 (SMM) –SHFE 1111 copper contract prices, the most active one, opened down RMB 140/mt at RMB 66,370/mt on Tuesday. After opening, SHFE three-month copper contract prices returned to fluctuate near the daily moving average after briefly falling to RMB 66,060/mt. Later, HSBC’s China PMI was announced, and was better than the previous figure, pushing up SHFE three-month copper prices. However, due to a lack of more buying force, SHFE three-month copper contract prices temporarily met resistance after touching the 5-day moving average of RMB 66,490/mt, and then narrowly fluctuated around the daily moving average. In the afternoon session, as domestic stock markets increased more than 1.5% after initially falling down, and since LME copper prices rallied to USD 8,850/mt when the US dollar index fell below 74 points, SHFE three-month copper contract prices gradually moved higher from support at the daily moving average, and then reversed earlier declines, with an intraday high at RMB 66,700/mt. Finally, SHFE 1111 copper contract prices closed at RMB 66,650/mt, up RMB 140/mt or 0.21%. Positions for SHFE 1111 copper contracts were down 2,696 lots, and trading volumes were down 36,732 lots. Despite advantages of the longs, SHFE three-month copper contract prices were expected to fluctuate in the short term due to strong resistance at the 10-day moving average.        

In spot market, SHFE copper prices reached high temporarily in the morning business, but copper offers held firm and were flat with the previous trading day levels, reporting at premiums of positive RMB 100-170/mt. During the second trading session, as traders were forced to move goods because of long-term contracts which were due before the month-end, market supply became sufficient. As a result, spot copper premiums fell to positive RMB 70-150/mt. Trade prices for standard-quality copper were between RMB 66,550-66,650/mt in the morning business, and RMB 66,600-66,750/mt for high-quality copper. As bullish sentiment gradually weakened, downstream producer’s buying interest was dampened, keeping market transactions muted. SHFE copper prices increased slightly in the afternoon session, but consumption failed to recover. In this context, cargo-holders showed more unwillingness to sell goods, reducing copper supply slightly, and keeping copper premiums firm. Premiums for high-quality copper were at positive RMB 100-160/mt. Traded prices were nearly unchanged from the morning session levels, and market transactions were somehow in a stalemate.