SHANGHAI, Dec. 19 (SMM) –The RMB:USD exchange rate fell by daily loss-limits for the 11th straight day last week, attributed by some to overseas money choosing to withdraw from Chinese markets, reflecting concern over China's near-term economic development. The Chinese government tone for 2012 was set during the Central Economic Work Conference with a focus on maintaining economic growth and improving people's livelihoods. This, however, failed to save Chinese stock markets, which dove below 2,200, losing more than 6% as bearish sentiment spread. This led SHFE copper prices to fall below RMB 53,000/mt, down 8.5% on the week. SHFE 1203 copper contracts became the most actively-traded copper contracts last week while SHFE copper prices diverged from all moving averages under the impact of macroeconomic news and technical pressure.
Increasing bearish sentiment and cargo-holders' eagerness to sell at year's end sent spot copper discounts up to RMB 500/mt over the past week. While this enticed speculators to buy, downstream producers had little interest as orders remained sluggish and as cash flow pressures at year's end bit in. Although SHFE current-month copper contracts were delivered last week, spot copper traded at a discount. Due to a sharp drop in the supply of domestic copper, especially high-quality copper, cargo-holders generally held back goods, refusing to trade at discounts of RMB 300-500/mt. Market supply was dominated by imported copper over the past week.
SHFE copper prices will likely look for support at RMB 52,000/mt in the coming week, while spot copper will trade at slight discounts.