SMM Copper Price Forecast (Nov. 21-25)

SHANGHAI, Nov. 21 (SMM) –Chinese stock markets plunged by 2.5% last week. SHFE copper prices fluctuated around RMB 57,000/mt early in the week, but later fell to RMB 54,300/mt after opening low on Friday and closing the week down nearly 7%. Since the Shanghai Futures Exchange (SHFE) raised deposits for copper contracts to ward off huge risks in international markets, the drop in trading volumes was less than in the previous week. The shift of the most actively-traded copper contracts was completed last week.

Early in the week, spot copper cargo-holders were actively moving goods at high price levels even with discounts of negative RMB 300-200/mt since the price gap between SHFE 1111 and 1112 copper contracts was more than RMB 700/mt. However, copper futures prices continued to fall after SHFE 1202 copper contracts became the most actively-traded copper contract, and cargo-holders became reluctant to sell, causing copper supply to fall and helping spot copper premiums climb to between positive RMB 500-700/mt. Supply of high-quality copper especially fell significantly, expanding its price gap with standard-quality copper. Downstream producers remained cautious, buying on an as-needed basis, while speculative interest weakened due to high copper premiums.

Copper prices will continue to fluctuate widely in the coming week, with LME copper prices expected between USD 7,500-7,700/mt and SHFE copper prices between RMB 55,000-57,000/mt. High copper premiums on domestic markets will continue into the coming week.