SHANGHAI, Oct. 26 (SMM) –As LME copper prices extended gains overnight, the most active SHFE 1201 copper contract prices opened RMB 2,500/mt higher at RMB 56,000/mt on Tuesday, and fluctuated around the price mark after the opening. LME copper prices surged significantly near the midday and challenged USD 7,800/mt, and Chinese stock markets also returned to 2,400 points, helping all SHFE copper contracts increase sharply. Large-scale position closings by short investors also pushed SHFE copper prices to the upper trading limit of RMB 57,240/mt. In the afternoon session, LME copper prices fell to above USD 7,700/mt, and SHFE three-month copper contract prices also declined from highs due to large scale position closings, with prices closely fluctuating around RMB 57,000/mt. Finally, SHFE 1201 copper contract prices closed at RMB 56,710/mt, up RMB 3,210/mt or a gain of 6%. Positions for SHFE 1201 copper contracts were down 31,762 lots, while trading volumes were up 248,000 lots. Overall positions for all SHFE copper contracts were down 65,570 lots, but trading volumes were up 256,000 lots. SHFE copper prices Tuesday touched the upper trading limit for two consecutive days, but both long and short investors chose to close positions during the whole trading day, indicating growing risks over the short term.

In the spot market, after SHFE copper prices opened higher, copper premiums fell slightly to between positive RMB 150-250/mt before 11:00 am. Traded prices for standard-quality copper were between RMB 56,400-56,800/mt before 11:00 am, and RMB 56,500-56,900/mt for high-quality copper. SHFE copper prices followed LME copper prices to surge significantly after 11:00 am, touching the upper trading limit again. Market suppliers and buyers generally stood on the sidelines due to volatile price changes. There were also some speculators who believed SHFE copper prices would increase again the next day, and offered premiums of positive RMB 0/mt, but transaction volumes were extremely limited. Traded prices were reported between RMB 57,000 -58,000/mt, but with no market transaction at all. SHFE copper prices fell below the upper trading limit in the afternoon session, and premiums for the “Guixi” brand rose to between positive RMB 300-350/mt due to unwillingness in sales, and mainstream spot copper premiums were reported at between positive RMB 180-280/mt. Traded prices stabilized between RMB 57,300 -57,950/mt in the afternoon business, while spot copper supply remained sufficient, with some downstream producers making purchases.