SMM Daily Review - 2011/11/3 Copper Market

SHANGHAI, Nov. 4 (SMM) –As LME copper prices closed higher overnight, SHFE 1201 copper contract prices, the most active one, opened RMB 490/mt up at RMB 58,210/mt on Thursday. After the opening, given resistance at the 5-day moving average, SHFE three-month copper contract prices only climbed to RMB 58,350/mt at the high-end and then fluctuated around RMB 57,500/mt. In the afternoon session, as LME copper prices slid to test USD 7,700/mt, SHFE three-month copper contract prices declined by more than RMB 1,000/mt, with the daily low-end at RMB 56,580/mt. Finally, the most actively-traded copper contract prices closed at RMB 56,800/mt, down RMB 920/mt or a loss of 1.59%. Positions for the most actively-traded copper contracts were down 9,610 lots, while trading volumes were down 136,000 lots. However, total trading volumes were still above 1 million lots, and the handover rate was more than 400%. Germany, France and other European countries announced on November 3rd Beijing time to suspend Greece’s bailout fund of EUR 8 billion which was previously scheduled to release this month, and would make the final decision after the Greece’s public vote. Meanwhile, the European leaders said the Greek vote would also decide whether or not Greece would remain in the Euro-zone area. As a result, the Euro was dampened again and long investors of LME copper closed positions rapidly. Sell-off pressures tended to be on the rise while investors were awaiting results of G20 Summit to be held in the evening, with panic and cautious sentiment dominating the market.  

In the spot market, despite a continuous drop in SHFE copper prices, copper premiums failed to increase further, reporting between positive RMB 0-120/mt in the morning business, since cargo-holders were active in moving goods for cash generation and copper supply, especially imported copper, was sufficient. Traded prices for standard-quality copper were between RMB 58,100-58,350/mt, and RMB 58,150-58,400/mt for high-quality copper. Traders kept cautious towards operation before the weekend, and downstream producers still made purchases on an as-needed basis, leading to sluggish market transactions. In the afternoon session, although SHFE copper prices slid by RMB 1,000/mt, spot copper premiums didn’t experience increases. Traded prices fell to between RMB 57,600-58,250/mt, experiencing huge fluctuations again, and only some downstream producers entered the market at the lows.