SMM Daily Review - 2011/12/29 Copper Market

SHANGHAI, Dec. 30 (SMM) –As LME copper prices slumped overnight, SHFE 1203 copper contract prices, the most active one, opened down by RMB 750/mt at RMB 54,220/mt Thursday. After the opening, rising Chinese stock markets helped drive up SHFE three-month copper contract prices, which touched a high of RMB 54,550/mt. However, as LME copper prices lost USD 7,400/mt in the afternoon session, SHFE three-month copper contract prices immediately lost support at daily moving averages and slid to near RMB 54,000/mt. While selling pressures and large-scale buying flowed into markets at this price mark, SHFE three-month copper contract prices struggled at RMB 54,150/mt. Finally, SHFE 1203 copper contract prices ended at RMB 54,220/mt, down RMB 1,050/mt, or a loss of 1.9%. Positions for SHFE 1203 copper contracts were up 1,354 lots, while trading volumes were down 25,224 lots. SHFE copper prices already moved away from all daily moving averages, and were expected to fall further for the foreseeable future.

In the spot market, as SHFE copper prices opened down by nearly RMB 1,000/mt, copper discounts narrowed to between negative RMB 450-250/mt in the morning session. Traded prices for standard-quality copper were between RMB 54,500-54,600/mt, and RMB 54,650-54,750/mt for high-quality copper. Supply of low-quality copper increased during the trading day, but that of high-quality copper decreased, helping cargo-holders of high-quality copper hold prices firm. Spot copper discounts fell further as SHFE copper prices steadied, and the price gap between standard-quality and high-quality copper expanded. Some downstream producers made limited purchases in the morning business, but overall market activity remained quiescent. In the afternoon session, as SHFE copper prices extended losses, and as cargo-holders became unwilling to move goods, spot copper discounts narrowed further to between negative RMB 250-150/mt. Traded prices declined to between RMB 54,350-54,600/mt in the afternoon session, but market transactions kept lackluster.