SHANGHAI, Mar. 5 (SMM) –As LME copper prices closed with strong gains overnight, SHFE 1205 copper contract prices, the most active one, opened RMB 460/mt up at RMB 60,910/mt Friday. After the opening, SHFE copper prices moved higher due to position closings and broke resistance at RMB 61,000/mt before the midday as Chinese stock prices rose. However, due to resistance at RMB 61,390/mt and as long investors made profit-taking, SHFE copper prices failed to break the resistance at RMB 61,000/mt in the afternoon session, fluctuating narrowly around RMB 61,200/mt. Finally, SHFE 1205 copper contract prices closed at RMB 61,330/mt, up RMB 880/mt or 1.46%. Positions for SHFE 1205 copper contract were down 14,274 lots, and trading volumes were down 62,988 lots. Positions and trading volumes for SHFE 1206 copper contract were up 30,886 lots and 61,492 lots, respectively, highlighting the shift of the most actively-traded copper contract. SHFE copper prices increased above the 5-day moving average, with upside momentum growing over the near term.
In spot markets, as SHFE copper prices moved higher after a high open, some hedged copper was locked, helping spot copper prices hold firm. In this context, spot copper discounts were reported between negative RMB 300-200/mt in Friday’s morning business. Traded prices for standard-quality copper were between RMB 60,150-60,350/mt, and RMB 60,250-60,450/mt for high-quality copper. Domestic copper smelters increased sales due to the falling copper discounts during the whole trading day, with market supply dominated by high-quality copper. Supply of low-quality copper decreased sharply, though. Traders were actively buying at low price levels in the morning session, while downstream producers stood on the sidelines as traded prices stood above RMB 60,000/mt, keeping market activity quiet. In the afternoon business, SHFE copper prices showed resilience, but spot copper supply was limited, causing cargo-holders to quote firm prices. Mainstream copper discounts therefore fell to between negative RMB 250-180/mt in the afternoon session, while traded prices stayed flat with the morning business levels. SHFE copper inventories increased by 5,401 mt to 221,487 mt in the week ending March 2nd, indicating the still sluggish domestic copper consumption, which will continue to dampen copper prices over the near term.