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SMM Daily Review - 2011/12/2 Copper Market
Dec 5,2011 09:07CST
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Source:SMM
SHFE 1202 copper contract prices opened flat at 58,860/mt on Friday. Copper premiums fell from initial levels of between positive RMB 300-350/mt to between RMB 120-250/mt near the midday.

SHANGHAI, Dec. 5 (SMM) –SHFE 1202 copper contract prices, the most active one, opened flat at 58,860/mt on Friday. After the opening, as new short investors entered the market, and since Chinese stock markets kept weak and closed down by 1%, SHFE three-month copper contract prices failed to rally and fluctuated near RMB 57,500/mt, with a low touching RMB 57,360/mt. However, SHFE three-month copper contract prices gradually stabilized and moved above the daily moving average in the afternoon session. Tracking increasing LME copper prices, SHFE three-month copper contract prices climbed to RMB 58,120/mt at the tail of trading, but still came under pressure at the RMB 58,000/mt level. Finally, SHFE 1202 copper contract prices closed at RMB 58,060/mt, up RMB 200/mt or 0.35%. Positions for SHFE 1202 copper contracts were up 22,272 lots, and trading volumes were up 40,848 lots. Long and short investors held divergent views ahead of the release of the US non-farm payrolls, and SHFE copper prices were awaiting guidance from LME copper with great pressures at RMB 58,100/mt. 

In the spot market, as SHFE copper prices fluctuated after a low open, and since market supply was ample and consumption failed to improve, copper premiums fell from initial levels of between positive RMB 300-350/mt to between RMB 120-250/mt near the midday. Traded prices for standard-quality copper were between RMB 58,200-58,350/mt in the morning business, and RMB 58,250-58,500/mt for high-quality copper. Spot copper supply increased due to a rise in hedged copper on the previous day and since traders made purchases at low copper discounts that day. However, as copper prices were nearly unchanged from the previous day levels, downstream producers generally chose to stand on the sidelines due to uncertainties and instabilities in future copper prices, while traders also reduced purchases to avoid incurring losses before the weekend. In this context, overall market transactions were restricted in the morning session. In the afternoon business, as SHFE copper prices drifted higher, spot copper premiums declined again, with mainstream premiums reported between positive RMB 100-220/mt, and traded prices stayed basically flat with the morning business levels. Market supply decreased slightly in the afternoon session, but consumption failed to improve. Copper inventories compiled by the SHFE were down by 7,550 mt to 57,655 mt in the week ending December 2nd, a factor of supporting firm copper price trends. 
 

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