SHANGHAI, Jan. 16 (SMM) –Chinese Premier Wen Jiabao's recent statements at the National Finance Conference helped boost Chinese stock markets, and China's December's CPI and PPI growth was lower as expected and is a strong indication inflation is coming under control, but is also raising expectations for further cuts in the bank Reserve Requirement Ratio (RRR) before the Chinese New Year holiday. SHFE copper prices rose after initially falling, and stood above the RMB 58,000/mt level, up 3.5% for the week. Positions for SHFE copper contracts were significantly down by 40,000 lots, while the SHFE/LME copper price ratio fell further since the increase in SHFE copper prices were less than that for LME copper.
In spot markets last week, copper discounts expanded, but cargo-holders and domestic copper smelters became less willing to move goods as the Chinese New Year holiday nears, causing copper supply to fall. Speculators chose to enter the market at discounts last Friday, but downstream producers chose to stay out of the market, making the already limited market transactions more pronounced before the holiday.
SHFE copper prices will move between RMB 56,500 -59,000/mt in the coming week. Spot copper supply will decrease further, which will allow slight copper discounts or even slight premiums.