SMM Daily Review – 2012/2/8 Copper Market

SHANGHAI, Feb. 9 (SMM) –The most actively-traded SHFE 1204 copper contract opened RMB 20/mt higher at RMB 60,300/mt Wednesday. SHFE three-month copper contract prices fluctuated around RMB 60,400/mt after the opening. In the afternoon session, as Chinese stock markets surged by 2.5%, and as LME copper prices rallied to above USD 8,600/mt, SHFE three-month copper contract prices broke resistance of RMB 61,000/mt and climbed to a high of RMB 61,470/mt. Finally, SHFE 1204 copper contract prices closed at RMB 61,390/mt, up RMB 1,110/mt or a gain of 1.84%. Positions for SHFE 1204 copper contracts were down 17,440 lots, and trading volumes were down 20,330 lots, while positions and trading volumes for SHFE 1205 copper contracts were up 36,798 lots and 152,000 lots, respectively. The shift of the most actively-traded copper contract was expected to be completed Thursday. SHFE copper prices were well supported at the low-end, and technical indicators continued to point upside following temporary struggle.

In the spot market, SHFE copper prices moved higher, but cargo-holders narrowed offers for copper discounts owing to the approach of the delivery date, to between negative RMB 300-150/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,350-59,530/mt, and RMB 59,450-59,650/mt for high-quality copper. As the gap between current-month copper contracts and forward contracts expanded during the trading day, speculative activity increased. However, consumption downstream kept cautious since copper prices hadn’t moved out of fluctuations. In the afternoon business, SHFE copper prices rose by nearly RMB 1,000/mt, but market speculation on increasing prices was heightening, causing spot copper cargo-holders to hold prices firm. In this context, expansion in copper discounts was limited, with mainstream offers reported between negative RMB 300-200/mt. Traded prices surged to between RMB 59,600 -60,300/mt in the afternoon session, but market players chose a wait-and-see stance at above RMB 60,000/mt.