SHANGHAI, Feb. 6 (SMM) – Chinese stock markets failed to rally following the Chinese New Year holiday. Trading volumes for the most actively-traded copper contracts were also down by 700,000 lots compared with pre-holiday levels and market activity was low. SHFE copper prices remained weak despite rising LME copper prices during the holiday, causing the SHFE/LME copper price ratio to fall to 7.14. The most actively-traded copper contract prices retreated to RMB 59,500/mt, down from RMB 61,500/mt. SHFE copper prices were trapped below the 5 and 10-day moving averages and had little upward momentum.

In the spot market, losses for copper importers grew last week, forcing them to hold goods at current low prices. Domestic copper smelters also had no intention of selling goods at existing discounts of 400-300/mt. Despite the reluctance to sell, overall market supply was still stable. Early last week, traders entered the market when copper discounts were relatively large, but downstream producers were absent since they had not yet restarted production. As a result, market transactions were relatively quiet.

SHFE copper prices should move between RMB 58,500-60,500/mt in the coming week, and spot copper discounts will gradually narrow.