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SMM Daily Review - 2011/12/14 Copper Market
Dec 15,2011 09:04CST
smm insight
SHFE 1202 copper contract prices opened RMB 400/mt lower at RMB 55,750/mt Wednesday. Spot copper discounts expanded to between negative RMB 250-150/mt near the midday.

SHANGHAI, Dec. 15 (SMM) –As LME copper prices closed with losses overnight, SHFE 1202 copper contract prices, the most active one, opened RMB 400/mt lower at RMB 55,750/mt Wednesday. As LME copper prices tested support at USD 7,500/mt during the whole trading day, and since Chinese stock markets remained weak and closed down, SHFE three-month copper contract prices fell to fluctuate around the daily moving average after meeting resistance at RMB 56,000/mt, with an intraday low at RMB 55,450/mt. Finally, the most actively-traded copper contract prices closed at RMB 55,710/mt, down RMB 440/mt or 0.78%. Positions for SHFE 1202 copper contracts were down 4,018 lots, and trading volumes were down 11,722 lots, while positions for SHFE 1203 copper contracts were up 12,318 lots, highlighting the continuous shift of the most actively-traded copper contracts. Short investors had more advantages against long investors, and SHFE copper prices already moved away from all moving averages. In this context, SHFE copper prices were expected to fall to between RMB 54,500-55,500/mt registered in the middle of November.

In the spot market, although SHFE copper prices extended losses, growing bearish sentiment propelled cargo-holders to move goods aggressively, which caused copper discounts to expand to between negative RMB 250-150/mt near the midday. Traded prices for standard-quality copper were between RMB 56,150-56,250/mt in the morning business, and RMB 56,200-56,350/mt for high-quality copper. Cargo-holders of domestic copper were forced to move goods as well, but market supply was still dominated by imported copper, with discounts continuing to expand. Only some speculators made appropriate purchases, and overall market transactions were very limited in the morning session. In the afternoon business, SHFE current-month copper contract prices edged higher, and spot copper discounts continued to increase, up to between negative RMB 350-150/mt, while traded prices declined to between RMB 56,100-56,350/mt. Owing to increasing bearish sentiment, market transactions remained very limited with both downstream producers and speculators having no interest in purchases in the afternoon session.   


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