SMM Daily Review – 2012/2/6 Copper Market-Shanghai Metals Market

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SMM Daily Review – 2012/2/6 Copper Market

SMM Insight 10:03:35AM Feb 07, 2012 Source:SMM

SHANGHAI, Feb. 7 (SMM) –As LME copper prices closed with strong gains overnight, SHFE 1204 copper contract prices, the most active one, opened RMB 1,070/mt higher at RMB 60,850/mt Monday. As long investors made profit-taking, SHFE three-month copper contract prices lacked upward momentum after the opening, and fluctuated around the daily moving average during the whole trading day, with an intraday high at RMB 60,950/mt. At the tail of trading, as Chinese stock markets fell after initially surging, SHFE three-month copper contract prices came under pressure at the daily moving average and retreated to a low of RMB 60,530/mt. Finally, SHFE 1204 copper contract price closed at RMB 60,530/mt, up RMB 750/mt or 1.25%. Positions for SHFE 1204 copper contracts were down 12,896 lots, while trading volumes were up 17,388 lots. Both short and long investors chose to close positions during the whole trading day, and long investors had little intention of keeping up with rising prices. Therefore, SHFE copper prices would likely test RMB 60,000/mt and remain weak for the foreseeable future.

In the spot market, SHFE copper prices fluctuated at high levels, but cargo-holders had no intention of expanding copper discounts since hedge trading was constrained. In this context, copper discounts were reported between negative RMB 350-200/mt in the morning business. Daily traded prices for standard-quality copper were between RMB 59,500-59,700/mt, and RMB 59,600-59,800/mt for high-quality copper. Downstream producers stuck to the sidelines as copper prices increased, so overall market activity was cautious on Monday.

SMM conducted a survey about copper prices this week.

Based on this survey, 58% insiders are optimistic towards the outlook, believing LME copper prices will hopefully challenge an early high of USD 8,800/mt and SHFE copper prices will likely move towards RMB 63,000-65,000/mt. US nonfarm payrolls were positive, and the jobless rate fell for three consecutive months, meaning a continuous recovery in the US economy, which will be able to prop up copper prices in the short term. SHFE copper prices are likely to make corrections and rebound gradually given the falling SHFE/LME copper price ratio. Technical indicators are also pointing upside for both LME and SHFE copper prices. According to the latest Commodity Futures Trading Commission (CFTC) reports, net long positions for Comex copper funds were 4,183 lots as of January 31, and 4,955 lots for net short positions as of December 18, 2011. Comex copper funds rose by 9,000 lots for long positions in one and a half months, highlighting bullish sentiment for copper markets over the near term. China will announce the latest CPI data this week, and markets commonly expect the data to fall further, increasing market speculation of a cut in the Reserve Requirement Ratio (RRR). Improved investor sentiment will help push up copper prices. In the spot market, downstream producers will gradually return to the market after the Lantern Festival, which will help improve copper markets. Together with the approach of the delivery data for current-month copper contract, spot copper discounts will narrow and therefore support copper prices.  

12% market insiders SMM surveyed expect LME copper prices to slide to near USD 8,300/mt and SHFE copper prices to test support at RMB 59,000/mt. As Greece is unwilling to promise a reform expected by the European Union (EU) and the International Monetary Fund (IMF), the euro zone finance ministers postponed the February 6 meeting to February 8. Meanwhile, the finance ministers said the euro zone will not provide bailout funds for Greece if the country doesn't implement reform, weighing on the euro and lifting the US dollar. Chinese stock markets are unlikely to increase given no improved cash flows, so SHFE copper prices will probably move downward to look for support. In the spot market, although downstream producers will gradually return to the market following the Lantern Festival, sluggish orders and tightness in cash flows will keep them standing on the sidelines, which can't bolster copper futures prices.

30% market insiders anticipate copper prices will continue to fluctuate this week, with LME copper prices expected between USD 8,400-8,500/mt and SHFE copper prices between RMB 59,500-61,000/mt. Negative and positive news was intertwined. Despite upbeat economic data from the US, the euro zone debt crisis persists. The struggle between long and short investors was severe technically. On the copper supply side, LME copper inventories have been falling, but SHFE copper inventories have increased sharply after the Chinese New Year holiday. Spot copper discounts in London expanded, while those on Chinese domestic markets narrowed. In Chinese markets, tight cash flows become one of the factors affecting downstream producers' buying interest, but weak orders have kept spot copper demand stable. LME copper prices have increased for four consecutive weeks, but most investors keep wary, with both buying interest and selling pressures limited.   

 

Key Words:  copper daily review  

Price

more
#1 Refined Cu
Apr.19
49430.0
-170.0
(-0.34%)
Yangshan Copper Premium(Bill of Lading)
Apr.19
51.5
0.0
(0.00%)
Yangshan Copper Premium(Warehouse Warrant)
Apr.19
50.5
0.0
(0.00%)
Imported Cu Concentrate TC(Cu≥26%,Week)
Apr.19
67.0
-1.5
(-2.19%)
Imported Cu Concentrate TC(Cu≥26%,Month)
Mar.29
73.5
-6.0
(-7.55%)

SMM Daily Review – 2012/2/6 Copper Market

SMM Insight 10:03:35AM Feb 07, 2012 Source:SMM

SHANGHAI, Feb. 7 (SMM) –As LME copper prices closed with strong gains overnight, SHFE 1204 copper contract prices, the most active one, opened RMB 1,070/mt higher at RMB 60,850/mt Monday. As long investors made profit-taking, SHFE three-month copper contract prices lacked upward momentum after the opening, and fluctuated around the daily moving average during the whole trading day, with an intraday high at RMB 60,950/mt. At the tail of trading, as Chinese stock markets fell after initially surging, SHFE three-month copper contract prices came under pressure at the daily moving average and retreated to a low of RMB 60,530/mt. Finally, SHFE 1204 copper contract price closed at RMB 60,530/mt, up RMB 750/mt or 1.25%. Positions for SHFE 1204 copper contracts were down 12,896 lots, while trading volumes were up 17,388 lots. Both short and long investors chose to close positions during the whole trading day, and long investors had little intention of keeping up with rising prices. Therefore, SHFE copper prices would likely test RMB 60,000/mt and remain weak for the foreseeable future.

In the spot market, SHFE copper prices fluctuated at high levels, but cargo-holders had no intention of expanding copper discounts since hedge trading was constrained. In this context, copper discounts were reported between negative RMB 350-200/mt in the morning business. Daily traded prices for standard-quality copper were between RMB 59,500-59,700/mt, and RMB 59,600-59,800/mt for high-quality copper. Downstream producers stuck to the sidelines as copper prices increased, so overall market activity was cautious on Monday.

SMM conducted a survey about copper prices this week.

Based on this survey, 58% insiders are optimistic towards the outlook, believing LME copper prices will hopefully challenge an early high of USD 8,800/mt and SHFE copper prices will likely move towards RMB 63,000-65,000/mt. US nonfarm payrolls were positive, and the jobless rate fell for three consecutive months, meaning a continuous recovery in the US economy, which will be able to prop up copper prices in the short term. SHFE copper prices are likely to make corrections and rebound gradually given the falling SHFE/LME copper price ratio. Technical indicators are also pointing upside for both LME and SHFE copper prices. According to the latest Commodity Futures Trading Commission (CFTC) reports, net long positions for Comex copper funds were 4,183 lots as of January 31, and 4,955 lots for net short positions as of December 18, 2011. Comex copper funds rose by 9,000 lots for long positions in one and a half months, highlighting bullish sentiment for copper markets over the near term. China will announce the latest CPI data this week, and markets commonly expect the data to fall further, increasing market speculation of a cut in the Reserve Requirement Ratio (RRR). Improved investor sentiment will help push up copper prices. In the spot market, downstream producers will gradually return to the market after the Lantern Festival, which will help improve copper markets. Together with the approach of the delivery data for current-month copper contract, spot copper discounts will narrow and therefore support copper prices.  

12% market insiders SMM surveyed expect LME copper prices to slide to near USD 8,300/mt and SHFE copper prices to test support at RMB 59,000/mt. As Greece is unwilling to promise a reform expected by the European Union (EU) and the International Monetary Fund (IMF), the euro zone finance ministers postponed the February 6 meeting to February 8. Meanwhile, the finance ministers said the euro zone will not provide bailout funds for Greece if the country doesn't implement reform, weighing on the euro and lifting the US dollar. Chinese stock markets are unlikely to increase given no improved cash flows, so SHFE copper prices will probably move downward to look for support. In the spot market, although downstream producers will gradually return to the market following the Lantern Festival, sluggish orders and tightness in cash flows will keep them standing on the sidelines, which can't bolster copper futures prices.

30% market insiders anticipate copper prices will continue to fluctuate this week, with LME copper prices expected between USD 8,400-8,500/mt and SHFE copper prices between RMB 59,500-61,000/mt. Negative and positive news was intertwined. Despite upbeat economic data from the US, the euro zone debt crisis persists. The struggle between long and short investors was severe technically. On the copper supply side, LME copper inventories have been falling, but SHFE copper inventories have increased sharply after the Chinese New Year holiday. Spot copper discounts in London expanded, while those on Chinese domestic markets narrowed. In Chinese markets, tight cash flows become one of the factors affecting downstream producers' buying interest, but weak orders have kept spot copper demand stable. LME copper prices have increased for four consecutive weeks, but most investors keep wary, with both buying interest and selling pressures limited.   

 

Key Words:  copper daily review