SHANGHAI, Dec. 16 (SMM) –As LME copper prices plunged overnight, SHFE 1202 copper contract prices opened RMB 2,290/mt lower at RMB 53,430/mt Thursday. As both long and short investors chose to close positions on a large scale during the whole trading day, SHFE three-month copper contract prices met new resistance at RMB 54,000/mt, with prices narrowly fluctuating around RMB 53,800/mt in the morning business. In the afternoon session, as the Shanghai Composite Index lost 2,200 points, and since LME copper prices slid below USD 7,200/mt, SHFE three-month copper contract prices declined below RMB 53,400/mt, down as low as RMB 52,820/mt. Finally, SHFE 1202 copper contract prices closed at RMB 53,460/mt, down RMB 2,260/mt or 4.06%, while SHFE 1203 copper contract prices fell to RMB 52,420/mt and finally ended at RMB 53,050/mt, down RMB 2,430/mt. Positions for SHFE 1202 copper contracts were down 29,494 lots, but trading volumes were up 32,192 lots, while positions and trading volumes for SHFE 1203 copper contracts were up 53,612 lots, and 270,000 lots, respectively, a signal of the completion of the most actively-traded copper contracts. SHFE copper prices were expected to extend losses for the foreseeable future.
In the spot market, cargo-holders were forced to increase copper discounts, as SHFE copper prices fell by more than 3%, with the most actively-traded copper contract prices already losing RMB 54,000/mt, and since the price gap between SHFE 1112 and 1201 copper contract reached between RMB 500-600/mt as the delivery day approached. Combined with an increase of hedged copper, copper discounts were reported between negative RMB 500-300/mt in the morning session. Traded prices for standard-quality copper were between RMB 54,400-54,550/mt in the morning business, and RMB 54,450-54,700/mt for high-quality copper. Due to large copper discounts, cargo-holders of domestic copper, especially high-quality copper, could only choose to hold back goods. Market supply was dominated by imported copper, and speculators were major market participants, with bearish sentiment spreading in the market and low confidence about consumption at the year’s end. In the afternoon session, SHFE copper prices fell further, and the price differential between SHFE 1112 and 1201 copper contract expanded to RMB 1,000/mt, causing spot copper discounts to increase to between negative RMB 850-650/mt. Traded prices declined to between RMB 54,050 54,150/mt in the afternoon session, and market transactions were brought into stalemate.