SMM Daily Review – 2012/3/16 Copper Market

SHANGHAI, Mar. 19 (SMM) –As LME copper prices closed up overnight, SHFE 1206 copper contract prices, the most active one, opened RMB 580/mt higher at RMB 60,860/mt Friday. As some long investors left the market before the midday, SHFE copper prices failed to break resistance at RMB 61,000/mt substantively, with a high at RMB 61,050/mt. Near the midday, as rubber on the SHFE dived, and as short investors imposed selling pressures, SHFE copper prices began to come under pressure at the daily moving average and drifted slightly lower. In the afternoon session, Chinese stock markets rallied to 2,400, helping SHFE copper prices fluctuate narrowly around RMB 60,700/mt, with a low at RMB 60,580/mt. Finally, SHFE 1206 copper contract prices closed at RMB 60,780/mt, up RMB 500/mt or 0.83%. Positions for SHFE 1206 copper contract were down 4,434 lots, and trading volumes were down 1,248 lots. Despite support at RMB 60,500/mt, SHFE copper prices lacked upside momentum.

As SHFE 1204 copper contract prices surged by RMB 400/mt, spot copper discounts expanded after SHFE 1203 copper contract was delivered, up to between negative RMB 350-260/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,930-60,080/mt, and RMB 59,970-60,170/mt for high-quality copper. Spot copper supply remained sufficient during the whole trading day. Traders bought high-quality copper given large discounts, while downstream producers stood on the sidelines above RMB 60,000/mt. Therefore, market transactions were mainly conducted by traders in the morning session. In the afternoon session, SHFE copper prices trended lower, but spot copper discounts failed to narrow, while traded prices inched down to between RMB 59,900-60,050/mt. Copper inventories monitored by the SHFE increased by 2,495 mt in the week ending March 16th, showing the characteristic that SHFE 1203 copper contract was delivered during the week and also indicating sluggish copper consumption.