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SMM Daily Review - 2011/9/29 Copper Market
Sep 30,2011 09:05CST
price review forecast
SHFE 1112 copper contract prices, the most active one, directly opened at the daily limit-down of RMB 51,580/mt on Thursday.

SHANGHAI, Sept. 30 (SMM) –Due to overnight slumps, LME copper prices Thursday rapidly fell below USD 7,000/mt after the opening, and touched a low at USD 6,820/mt. As a result, SHFE 1112 copper contract prices, the most active one, directly opened at the daily limit-down of RMB 51,580/mt on Thursday. After the opening, overnight shorts closed positions for profit-taking, helping SHFE three-month copper contract prices increase above the RMB 51,580/mt mark. However, as buying from short-term speculators was limited, and since the Shanghai Composite Index continued to slump by more than 1%, SHFE three-month copper contract prices only moved around RMB 52,300/mt during the whole trading day, fluctuating by about RMB 1,000/mt. SHFE 1112 copper contract prices finally ended the day at RMB 52,600/mt, down RMB 2,280/mt, or a loss of 4.15%. Positions for SHFE 1112 copper contracts were down 36,454 lots and trading volumes were down 220,000 lots, while positions for all SHFE copper contracts were down 41,248 lots. Both longs and shorts were cautious towards trading for risk aversion before China’s National Day holiday. Friday would the last trading day before the holiday, and SHFE copper prices were expected to rise at first and then fall.

In the spot market, copper offers increased to premiums of positive RMB 100-150/mt, since SHFE copper prices opened significantly down following slumps in LME copper prices Thursday morning, and market transactions were relatively brisk at the lows. As LME copper prices returned around USD 7,000/mt, SHFE copper prices failed to rally. However, cargo-holders were eager to move goods for cash generation and all cut price offers, causing standard and high-quality copper to trade at slight discounts during major trading hours. Spot copper offers already fell to discounts of negative RMB 100-0/mt near the midday. Traded prices for standard-quality copper were between RMB 52,300-52,800/mt in the morning business, and RMB 52,400-53,000/mt for high-quality copper. Risk aversion sentiment before China’s National Day holiday, a lack of confidence, as well as increasing cash flow and technical pressures all made transactions more difficult. SHFE copper prices remained weak in the afternoon session, and spot copper offers turned into discounts across the board, while traded prices already fell below RMB 53,000/mt, keeping market transactions lackluster. 


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