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SMM Daily Review - 2011/12/23 Copper Market
Dec 26,2011 09:01CST
smm insight
Source:SMM
SHFE 1203 copper contract prices opened up by RMB 570/mt at RMB 55,150/mt Friday. Spot copper discounts expanded to between negative RMB 450-300/mt near the midday.

SHANGHAI, Dec. 26 (SMM) –As LME copper prices closed with gains overnight, SHFE 1203 copper contract prices opened up by RMB 570/mt at RMB 55,150/mt Friday. SHFE three-month copper contract prices moved higher after the opening and broke out resistance at RMB 55,500/mt, while increasing Chinese stock markets also provided support. SHFE three-month copper contract prices climbed to a high of RMB 55,880/mt after LME copper prices moved higher to test USD 7,600/mt in the afternoon session. Finally, SHFE 1203 copper contract prices closed at RMB 55,850/mt, up RMB 1,270/mt or 2.33%. Positions for SHFE 1203 copper contracts were up 4,816 lots, while trading volumes were down 64,904 lots. More long investors entered the market after SHFE copper prices broke out resistance at the RMB 55,000/mt level, but support at moving averages would be tested for the foreseeable future. 

In the spot market, as SHFE copper prices continued to rebound, and as cargo-holders were eager to move goods due to cash flow problems at the year-end, copper discounts expanded significantly in the morning business, up to between negative RMB 450-300/mt near the midday. Traded prices for standard-quality copper were between RMB 55,450-55,550/mt, and RMB 55,550-55,700/mt for high-quality copper. However, downstream producers were unable to make purchases due to capital problems, and only some producers having capitals chose an opportunity to enter the market, leaving market transactions lackluster. In the afternoon session, since SHFE copper prices rose further, spot copper discounts increased to between negative RMB 500-350/mt, but market activity remained very light. Copper inventories monitored by the SHFE were up by 2,713 mt to 82,283 mt in the week ending December 23rd, which was negative to copper price trends over the short term. LME market would be closed for the Christmas holiday on December 26th and 27th, and position closings were likely to push up SHFE copper prices. However, increasing cash flow problems during the last trading week of the year would cause spot copper discounts to expand further.   
 

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