SMM Daily Review - 2011/12/9 Copper Market

SHANGHAI, Dec. 12 (SMM) –Due to declines in LME copper prices overnight, SHFE 1202 copper contract prices, the most active one, opened RMB 700/mt lower at RMB 57,110/mt Friday. After the opening, China announced both November’s CPI and PPI fell, but it had a limited impact on copper markets. LME copper prices still came under pressure at the 10-day moving average, and SHFE three-month copper contract prices faced resistance at levels near the 60-day moving average of RMB 57,500/mt. SHFE three-month copper contract prices basically fluctuated around the daily moving average during the whole trading day, with the low-end prices getting support at RMB 57,050/mt. Finally, SHFE 1202 copper contract prices closed at a recent low of RMB 57,070/mt, down RMB 740/mt or 1.28%. Positions for SHFE 1202 copper contracts were down 4,390 lots, and trading volumes were down 51,970 lots. Market investors had little interest in keeping up with rising prices, and SHFE copper prices faced growing upside pressures.

In the spot market, SHFE copper prices failed to move higher after a low open, but sufficient copper supply caused offers to generally be reported at discounts, while only some cargo-holders could maintain slight premiums. Mainstream copper offers were quoted between discounts of negative RMB 150/mt and premiums of positive RMB 20/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,700-57,800/mt in the morning session, and RMB 57,800-57,900/mt for high-quality copper. Copper discounts were limited during the whole trading day, and market transactions improved slightly compared with the previous day levels due to approach of the weekends. In the afternoon session, SHFE copper prices continued to remain weak, but spot copper was traded at discounts across the board due to increasing bearish sentiment, with discounts reported between negative RMB 200-30/mt. Traded prices fell to between RMB 57,600-57,800/mt in the afternoon session, and market transactions were down from the morning business levels. SHFE copper inventories were up by 15,057 mt to 72,712 mt in the week ending December 9th due to an increase in imported copper, which would dampen spot copper markets in the coming week.