SMM Daily Review - 2011/12/21 Copper Market

SHANGHAI, Dec. 22 (SMM) –As LME copper prices surged by more than USD 100/mt overnight, SHFE 1203 copper contract prices opened slightly up by RMB 980/mt at RMB 54,590/mt Wednesday. SHFE three-month copper contract prices fluctuated around the opening price during the whole trading day, with a fluctuating band only within RMB 300/mt. Chinese stock markets lost 2,200 points again, weighing down SHFE copper prices. Finally, SHFE 1203 copper contract prices settled at RMB 54,620/mt, up RMB 1,010/mt, or a gain of 1.88%. Positions for SHFE 1203 copper contracts were down 10,436 lots, and trading volumes were down nearly 120,000 lots. Markets still kept cautious after copper prices rebounded for two consecutive days. Short-term investors’ buying interest waned while awaiting guidance from news and data in the US and Europe.  

In the spot market, cargo-holders were aggressively moving goods due to cautious attitudes towards a rebound in copper prices, as SHFE copper prices fluctuated narrowly after a high open. In this context, spot copper premiums slid rapidly, and copper offers were quoted between discounts of negative RMB 50/mt and premiums of positive RMB 80/mt near the midday. Traded prices for standard-quality copper were between RMB 55,050-55,150/mt in the morning business, and RMB 55,150-55,250/mt for high-quality copper. Standard-quality copper failed to hold at premiums during the whole trading day, while premiums for high-quality copper were unable to entice speculators. Downstream producers barely made transactions after SHFE copper prices surged by RMB 1,000/mt, leading to very light market activity. In the afternoon business, SHFE copper prices kept fluctuating narrowly, and consumption stagnated, causing spot copper offers to fall to discounts of negative RMB 70-0/mt. Discounts for hydro-copper already expanded to negative RMB 250/mt in the afternoon session, and the highest traded price were lower than that in the morning business level.