SMM Daily Review – 2012/4/6 Copper Market

SHANGHAI, Apr. 9 (SMM) –The most actively-traded SHFE 1207 copper contract opened RMB 390/mt higher at RMB 60,040/mt last Friday, and just fluctuated narrowly around RMB 60,000/mt during the day, without guidance from LME copper prices. Stabilizing Chinese stock markets helped the bottom end SHFE copper prices rise to RMB 59,820/mt from the prior trading day. SHFE copper prices broke the previous fluctuating range at the tail of trading as short investors closed positions, increasing to an intraday high at RMB 60,460/mt. Finally, SHFE 1207 copper contract prices settled RMB 790/mt or 1.32% higher at RMB 60,440/mt. Positions for SHFE 1207 copper contracts were up 13,984 lots, but trading volumes were down 25,374 lots. Market activity was quiet while short and long investors were awaiting the release of the US nonfarm payrolls in the evening. SHFE copper prices suffered growing resistance at RMB 60,500/mt and were unlikely to break pressures at various moving averages over the near term.

Due to a closed LME copper market, investors in spot markets kept cautious. SHFE copper prices rebounded slightly, but spot copper supply decreased sharply, helping cargo-holders quote firm prices. Quotations for spot copper discounts were thus between negative RMB 130-60/mt in the morning business. Traded prices for standard-quality copper were between RMB 59,280-59,320/mt, and RMB 59,320-59,400/mt for high-quality copper. Domestic copper smelters chose to withhold goods, hoping that spot copper discounts would narrow further in the coming week. Downstream producers, though, reduced purchases significantly following large stockpiling on the previous day, leaving market activity lackluster. In the afternoon business, SHFE copper prices still showed strong resilience, boosting market optimism towards future prices. Spot copper cargo became rarely seen as a result, and caused copper discounts to narrow further. Some high-quality copper already traded at premiums of positive RMB 0/mt in the afternoon session, while traded prices edged higher to between RMB 59,320-59,450/mt. SHFE copper stocks increased by 3,278 mt to 222,092 mt in the week ending April 6th.