SMM Daily Review – 2012/3/22 Copper Market

SHANGHAI, Mar. 23 (SMM) –The most actively-traded SHFE 1206 copper contract opened marginally higher by RMB 30/mt at RMB 60,300/mt Thursday. SHFE copper prices posted cautious movements around the opening price after the opening while awaiting the HSBC Flash China Manufacturing Purchasing Managers' Index (PMI), which was reported after 10:30 to fall sharply. As a consequence, LME copper prices lost USD 8,400/mt, and SHFE copper prices also slid rapidly below RMB 60,000/mt. SHFE copper prices were not seen to stop falling in the afternoon session, with a low already touching RMB 59,620/mt. Finally, the most actively-traded copper contract for June delivery closed RMB 520/mt or 0.86% down at RMB 59,750/mt. Positions and trading volumes for the most actively-traded copper contract increased by 5,062 lots, and 74,864 lots, respectively. It was worth noticing that positions for SHFE 1207 copper contract were up 17,616 lots. Selling pressures were growing during the whole trading day, and SHFE copper prices lacked solid support at the low-end.

In spot markets, as SHFE copper prices fluctuated, copper discounts stagnated with light market activity. However, as SHFE copper prices slid by nearly RMB 500/mt following the release of the significantly falling HSBC Flash Manufacturing PMI data, copper discounts narrowed noticeably. Mainstream copper discounts were quoted between negative RMB 280-180/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,150-59,400/mt, and RMB 59,200-59,600/mt for high-quality copper. Cargo-holders who hedged against prices were moving goods aggressively, while others chose to withhold goods. Downstream producers significantly increased buying at the lows, helping market transactions rise after initially falling. In the afternoon session, SHFE copper prices continued to trend lower, so spot copper discounts held virtually flat with the morning business levels, while traded prices already slid to RMB 59,050/mt.