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SMM Daily Review - 2011/10/14 Copper Market
Oct 17,2011 09:08CST
price review forecast
SHFE 1112 copper contract prices opened RMB 360/mt lower at RMB 54,400/mt on Friday. In the spot market, cargo-holders pushed up spot copper premiums.

SHANGHAI, Oct. 17 (SMM) –As LME copper prices overnight closed lower, SHFE 1112 copper contract prices, the most active one, opened RMB 360/mt lower at RMB 54,400/mt on Friday. After the opening, SHFE three-month copper contract prices were pushed up to a high of RMB 55,380/mt as short-term long investors entered into the market. Later, after China announced that China's September CPI data remained high, LME copper prices stopped at around USD 7,400/mt. A 1% fall in Chinese stock markets imposed pressures on SHFE three-month copper contract prices, which fell to RMB 55,000/mt. And after that, short and long investors severely struggled at near RMB 56,000/mt. Finally, SHFE 1112 copper contract prices closed at RMB 56,010/mt, up RMB 1,250/mt or 2.28%. Positions for SHFE 1112 copper contracts were up 6,314 lots, and trading volumes were up 60,576 lots. SHFE copper prices would look for solid support at RMB 54,000/mt, and then take the opportunity to move higher.  

In the spot market, as China's CPI data for September remained high, SHFE copper prices fell after initially increasing, with already no volatility in SHFE current-month copper prices before the delivery date. The SHFE/LME copper price ratio remained at low levels, and cargo-holders pushed up spot copper premiums, which rose to positive RMB 170/mt from around positive RMB 100/mt in the morning business. The lowest traded prices for spot copper were higher than those on the prior day. Traded prices for standard-quality copper were between RMB 55,300-55,450/mt in the morning business, and RMB 55,400-55,550/mt for high-quality copper. There was no operating room for speculative investors, while downstream producers made purchases on an as-needed basis. Market transactions were moderate, and the situation of market oversupply also eased some. As SHFE copper prices increased more than RMB 700/mt in the afternoon session, cargo-holders for standard-quality copper voluntarily cut premiums to positive 30-50/mt, while cargo-holders for high-quality copper were unwilling to reduce premiums and kept premiums firm at positive RMB 100/mt, spreading the price difference between standard- and high-quality copper. Traded price expanded to between RMB 55,650-56,100/mt, but some speculators with optimistic sentiment still entered into the market. Copper inventories monitored by the Shanghai Futures Exchange (SHFE) were up 1,750 mt to 99,661 mt in the week ending October 14th, again indicating that cargo-holders of imported copper were recently eager to move goods for cash generation.  


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