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SMM Daily Review - 2011/10/21 Copper Market
Oct 24,2011 09:04CST
price review forecast
Source:SMM
As LME copper prices extended losses overnight, SHFE 1201 copper contract prices opened RMB 410/mt lower at RMB 50,760/mt last Friday.

SHANGHAI, Oct. 24 (SMM) –As LME copper prices extended losses overnight, SHFE 1201 copper contract prices opened RMB 410/mt lower at RMB 50,760/mt last Friday. After the opening, SHFE three-month copper contract prices experienced significant volatilities before the midday. As short investors reported profit-taking and capitals came into the market, SHFE three-month copper contract prices climbed up and reached to an intraday high of RMB 52,480/mt, with the price gap between the low and high-end prices reaching nearly RMB 2,000/mt. However, as the resistance of RMB 52,500/mt in late September arrived, and since the Shanghai Composite Index continued to set new yearly lows, SHFE three-month copper contract prices fell rapidly. In the afternoon session, long and short investors continued to struggle severely at RMB 51,500/mt, causing SHFE three-month copper contract prices to fluctuate around the price mark. Finally, SHFE 1201 copper contract prices closed at RMB 51,670/mt, up RMB 500/mt or 0.98%. Positions for SHFE 1201 copper contracts were up 3,016 lots and trading volumes were up 704,000 lots. Short investors had more advantages against long investors, and the rebound of SHFE copper prices were merely price corrections following the steep declines on the previous trading day. Hence, SHFE copper prices would fall further for the foreseeable future.         

In the spot market, cargo-holders were positive towards future copper prices after SHFE copper prices opened lower, helping initial copper premiums rise to between positive RMB 600-700/mt. Nevertheless, as SHFE copper prices increased by more than RMB 2,000/mt, spot copper premiums fell slightly to positive RMB 450-550/mt. SHFE copper prices continued to fall significantly before the midday, and spot copper premiums returned to higher levels. Overall spot copper premiums were reported between positive RMB 500-700/mt in the morning business. Traded prices for standard-quality copper were between RMB 52,700-53,500/mt, and RMB 52,800-53,600/mt for high-quality copper. Due to volatilities in copper prices, market transactions kept cautious. Cargo-holders were active in moving goods for cash generation, resulting in sufficient market supply. In the afternoon session, SHFE copper prices fluctuated widely, and spot copper premiums stabilized at positive RMB 550-700/mt, but traded prices declined to RMB 52,500-53,100/mt, with speculators mainly making purchases. Copper inventories monitored by the Shanghai Futures Exchange were down 11,935 mt to 87,726 mt in the week ending October 21st, and spot copper market would probably support the low-end SHFE copper prices.      
 

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