SMM Daily Review - 2011/9/7 Copper Market

SHANGHAI, Sept. 8 (SMM) –SHFE 1111 copper contract prices, the most active one, opened up RMB 520/mt at RMB 67,100/mt on Wednesday, with prices moving upside after a high open. After the opening, SHFE three-month copper contract prices kept fluctuating narrowly around the daily moving average, and the low-end was supported by the closing price RMB 67,100/mt on the prior trading day. Near the midday, a drop in the US dollar helped LME copper prices rise above USD 9,000/mt, and the Shanghai Composite Index increased nearly 1.9% after breaking through 2,500 points. In response, short investors closed positions in a large scale, which drove SHFE three-month copper contract prices to touch an intraday high RMB 67,860/mt in the afternoon session. Finally, SHFE 1111 copper contract prices closed at RMB 67,800/mt, up RMB 1,020/mt or 1.53%. Positions for SHFE 1111 copper contracts were down 2,138 lots, and trading volumes were down 69,434 lots. After closing down for four consecutive days, SHFE three-month copper contract prices returned to move between the 20 and the 30-day moving averages.   

In the spot market, as SHFE copper prices opened more than RMB 500/mt higher, and since market supply was ample due to cargo-holders’ activeness in moving goods for cash generation, copper premiums were dampened. However, standard-quality copper refused to trade at discounts in the morning business, and mainstream spot offers were quoted between premiums of positive RMB 0-50/mt. Near the midday, as SHFE copper prices increased slightly, some standard-quality copper was seen to make offers between discounts of negative RMB 30-20/mt. Trade prices for standard-quality copper were between RMB 67,330-67,380/mt in the morning business, and RMB 67,380-67,450/mt for high-quality copper. Standard-quality copper narrowed its price gap with high-quality copper during the whole trading day, and traded prices for spot copper stood above RMB 67,000/mt again. But downstream producers and traders were mixed towards the outlook, and market transactions were still mainly made by traders for speculative purpose. As SHFE copper prices rose by RMB 400/mt in the afternoon session, discounts for standard-quality copper expanded to negative RMB 50/mt, while high-quality copper kept traded at premiums of positive RMB 0/mt. Cargo-holders were reluctant to sell when SHFE current month copper contract prices stood above RMB 67,700/mt, keeping market transactions moderate, but long investors’ sentiment and confidence were boosted.