SMM Daily Review – 2012/2/20 Copper Market-Shanghai Metals Market

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SMM Daily Review – 2012/2/20 Copper Market

SMM Insight 09:49:06AM Feb 21, 2012 Source:SMM

SHANGHAI, Feb. 21 (SMM) –SHFE 1205 copper contract prices, the most active one, met resistance at the 20-day moving average of RMB 60,350/mt immediately after opening RMB 10/mt down at RMB 59,910/mt Monday. SHFE three-month copper contract prices fell all the way as large-scale selling pressures emerged, and as around 42,000 new positions were built in the session. In the afternoon business, Chinese stock prices narrowed daily gains and slid continuously, causing SHFE copper prices to drift lower further, down as low as RMB 59,270/mt. Finally, SHFE 1205 copper contract prices closed at RMB 59,340/mt, down RMB 580/mt or 0.97%. Positions for SHFE 1205 copper contracts were up 34,992 lots, and trading volumes were up 64,966 lots. Owing to rising selling pressures with resistance at RMB 60,000/mt for three consecutive days, SHFE copper prices would fluctuate between the 20 and 30-day moving averages for the near future.

Shanghai spot copper offers were reported between discounts of negative RMB 400-280/mt in Monday's morning business. Traded prices for standard-quality copper were between RMB 58,900-59,100/mt, and RMB 58,950-59,150/mt for high-quality copper. SHFE copper prices moved lower after the opening, which depressed market optimism but propelled cargo-holders of spot copper to move goods aggressively. Spot copper supply remained sufficient as a consequence, and caused copper discounts expand all the way. Some traders with enough capital chose to purchase appropriately given increasing copper discounts, but downstream producers continued to be wary of buying. Hence, overall transaction volumes were still limited in the spot market, resulting in market surpluses. In the afternoon session, as SHFE copper prices continued to slide, and as spot copper consumption failed to improve, copper discounts continued to expand, increasing above negative RMB 300/mt for high-quality copper. Mainstream copper discounts were reported between negative RMB 400-320/mt in the afternoon business, while traded prices fell to between RMB 58,650-58,950/mt. 

SMM conducted a survey with regard to this week's copper price movements.

Based on this survey, 55% market insiders contacted by SMM believe copper prices will fluctuate this week, with LME copper prices expected between USD 8,200-8,450/mt and SHFE copper prices between RMB 59,000 -60,500/mt. Although Greek leaders finally approved severe austerity measures, markets remain pessimistic the country will get the second bailout funds. Bond yields in some euro zone countries such as Portugal and Spain stand high while there are too many uncertainties and risks in a default, which will keep the euro's movements weak. However, positive economic data from the US will help boost US equities this week. The Dow Jones Average Index has surged to the highest since early 2008 and moved towards 13,000, which is positive for commodity prices, including copper. The US dollar faces increasing pressures to move higher after breaking out 80 temporarily, so it will impose limited pressures on copper prices. Gold prices have jumped owing to growing risk appetites, and crude oil prices are also surging due to political factors, both of which will bolster copper prices. In Chinese markets, a cut in Reserve Requirement Ration by China's central bank will help Chinese stock markets hold firm at 2,300 points over the near term, but substantive relaxation in cash flows needs more days. Besides, long investors are unlikely to conduct operations hastily before any significant improvement in future consumption is visible. As such, these market insiders expect copper prices to fluctuate during this week.   

45% market insiders SMM surveyed are pessimistic about the outlook, believing LME copper prices will retreat to USD 8,000/mt and SHFE copper prices will lose RMB 58,000/mt. Despite market optimism towards progress in Greek debt problems over the near term, it's worth noticing there is still risk Greece can get the second bailout package, since Germany is reported to be drafting a plan to force the country to leave the euro zone area. Other euro zone countries also suffer debt woes, weighing on copper markets. LME and SHFE copper met selling pressures, and the SHFE/LME copper price ratio has fallen. Copper inventories in China's, the world's biggest copper consumer, are high for the time being, leaving market supply sufficient. Hedged copper comes into the market amid sliding copper prices, and spot copper discounts expand. On the copper fundamental side, downstream orders haven't improved significantly, as easing in cash flows needs further confirmation. Copper consumption is unlikely to improve over the near term as a result, and market surpluses will sustain, which can easily cause sell-offs. Hence, copper prices will probably fall this week.  





 

Key Words:  copper daily review  

Price

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Aluminum Ingot
Apr.22
14130.0
80.0
(0.57%)
Alumina (Averaged)
Apr.22
2675.0
10.0
(0.38%)
Alumina-East
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2690.0
10.0
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Alumina -Central
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2680.0
10.0
(0.37%)
Alumina - North
Apr.22
2670.0
10.0
(0.38%)

SMM Daily Review – 2012/2/20 Copper Market

SMM Insight 09:49:06AM Feb 21, 2012 Source:SMM

SHANGHAI, Feb. 21 (SMM) –SHFE 1205 copper contract prices, the most active one, met resistance at the 20-day moving average of RMB 60,350/mt immediately after opening RMB 10/mt down at RMB 59,910/mt Monday. SHFE three-month copper contract prices fell all the way as large-scale selling pressures emerged, and as around 42,000 new positions were built in the session. In the afternoon business, Chinese stock prices narrowed daily gains and slid continuously, causing SHFE copper prices to drift lower further, down as low as RMB 59,270/mt. Finally, SHFE 1205 copper contract prices closed at RMB 59,340/mt, down RMB 580/mt or 0.97%. Positions for SHFE 1205 copper contracts were up 34,992 lots, and trading volumes were up 64,966 lots. Owing to rising selling pressures with resistance at RMB 60,000/mt for three consecutive days, SHFE copper prices would fluctuate between the 20 and 30-day moving averages for the near future.

Shanghai spot copper offers were reported between discounts of negative RMB 400-280/mt in Monday's morning business. Traded prices for standard-quality copper were between RMB 58,900-59,100/mt, and RMB 58,950-59,150/mt for high-quality copper. SHFE copper prices moved lower after the opening, which depressed market optimism but propelled cargo-holders of spot copper to move goods aggressively. Spot copper supply remained sufficient as a consequence, and caused copper discounts expand all the way. Some traders with enough capital chose to purchase appropriately given increasing copper discounts, but downstream producers continued to be wary of buying. Hence, overall transaction volumes were still limited in the spot market, resulting in market surpluses. In the afternoon session, as SHFE copper prices continued to slide, and as spot copper consumption failed to improve, copper discounts continued to expand, increasing above negative RMB 300/mt for high-quality copper. Mainstream copper discounts were reported between negative RMB 400-320/mt in the afternoon business, while traded prices fell to between RMB 58,650-58,950/mt. 

SMM conducted a survey with regard to this week's copper price movements.

Based on this survey, 55% market insiders contacted by SMM believe copper prices will fluctuate this week, with LME copper prices expected between USD 8,200-8,450/mt and SHFE copper prices between RMB 59,000 -60,500/mt. Although Greek leaders finally approved severe austerity measures, markets remain pessimistic the country will get the second bailout funds. Bond yields in some euro zone countries such as Portugal and Spain stand high while there are too many uncertainties and risks in a default, which will keep the euro's movements weak. However, positive economic data from the US will help boost US equities this week. The Dow Jones Average Index has surged to the highest since early 2008 and moved towards 13,000, which is positive for commodity prices, including copper. The US dollar faces increasing pressures to move higher after breaking out 80 temporarily, so it will impose limited pressures on copper prices. Gold prices have jumped owing to growing risk appetites, and crude oil prices are also surging due to political factors, both of which will bolster copper prices. In Chinese markets, a cut in Reserve Requirement Ration by China's central bank will help Chinese stock markets hold firm at 2,300 points over the near term, but substantive relaxation in cash flows needs more days. Besides, long investors are unlikely to conduct operations hastily before any significant improvement in future consumption is visible. As such, these market insiders expect copper prices to fluctuate during this week.   

45% market insiders SMM surveyed are pessimistic about the outlook, believing LME copper prices will retreat to USD 8,000/mt and SHFE copper prices will lose RMB 58,000/mt. Despite market optimism towards progress in Greek debt problems over the near term, it's worth noticing there is still risk Greece can get the second bailout package, since Germany is reported to be drafting a plan to force the country to leave the euro zone area. Other euro zone countries also suffer debt woes, weighing on copper markets. LME and SHFE copper met selling pressures, and the SHFE/LME copper price ratio has fallen. Copper inventories in China's, the world's biggest copper consumer, are high for the time being, leaving market supply sufficient. Hedged copper comes into the market amid sliding copper prices, and spot copper discounts expand. On the copper fundamental side, downstream orders haven't improved significantly, as easing in cash flows needs further confirmation. Copper consumption is unlikely to improve over the near term as a result, and market surpluses will sustain, which can easily cause sell-offs. Hence, copper prices will probably fall this week.  





 

Key Words:  copper daily review