SMM Daily Review - 2011/9/2 Copper Market

SHANGHAI, Sept. 5 (SMM) –SHFE 1111 copper contract prices, the most active one, opened down RMB 210/mt at RMB 68,200/mt on Friday. After opening, SHFE three-month copper contract prices gradually moved lower and touched a low at RMB 67,640/mt, as LME copper prices met resistance near USD 9,100/mt, and since Chinese stock markets fell by more than 1% and the longs reduced holdings of position. In the afternoon session, as LME copper prices rallied, and since short-term shorts made position closings due to profit-taking after the declines in Chinese stock markets slowed down, SHFE three-month copper contract prices slightly rebounded to RMB 67,800/mt, narrowing the daily declines. Finally, SHFE 1111 copper contract prices closed at RMB 67,830/mt, down RMB 580/mt or 0.85%. Positions for SHFE 1111 copper contracts were down 3,208 lots, and trading volumes were down 25,656 lots. Both the longs and shorts were cautious before the release of the US employment data, and whether or not SHFE three-month copper contract prices could be well supported the 5-day moving average would depend on the guidance of LME copper prices on Friday night. 

In spot market, as SHFE copper prices moved lower after a low open in the morning business, copper discounts narrowed between discounts of negative RMB 30/mt and premiums of positive RMB 30/mt. Trade prices for standard-quality copper were between RMB 67,950-68,030/mt in the morning business, and RMB 68,000-68,150/mt for high-quality copper. Due to optimistic expectations, cargo-holders were unwilling to make transactions at discounts, reducing market supply. Downstream producers took advantage of a drop in SHFE copper prices to make more purchases. SHFE copper prices stopped falling in the afternoon session, but low prices of goods sources were rarely seen in the market. As a result, cargo-holders of spot copper refused to offer discounts, helping price offers turning into premiums. Standard-quality copper offers were between premiums of positive RMB 0-50/mt, and high-quality copper offers were between premiums of positive RMB 50-80/mt. Traded prices tried to hold RMB 68,000/mt, but fell between RMB 67,900 -68,050/mt. Traders were the main participants in consumption and actively made purchases due to optimistic expectations towards future prices, helping improve the overall trading sentiment. Copper inventories monitored by the SHFE were up 5,532 mt to 107,790 mt in the week ended September 2nd, showing the characteristic of increasing imported copper.