SHANGHAI, Apr. 16 (SMM)–SHFE copper prices tracked losses in LME copper prices, and broke out of the price band in place since mid-February, moving away from all moving averages. However, a rally of nearly 2% in the Shanghai Composite Index helped SHFE copper prices hold steady at RMB 58,000/mt and show more resilience than LME copper, with a drop of 3.6% for the week. As a result, the SHFE/LME copper price ratio improved slightly. The struggle between long and short investors became severe at RMB 58,000/mt, causing total trading volumes for SHFE copper contracts to increase by nearly 1.4 million lots and positions to increase by over 50,000 lots.
In spot markets last week, copper traded at premiums as SHFE copper prices fell sharply and as the delivery day for SHFE current-month copper contracts neared. However, hedged copper entered markets as copper prices fell, limiting the size of copper premiums. Downstream producers bought aggressively at prices below RMB 58,000/mt, but speculative interest weakened as premiums firmed, causing market surpluses.
In the coming week, SHFE copper prices will try to hold at RMB 58,000/mt and advance to the 10-day moving average of RMB 59,400/mt. In spot markets, copper premiums will turn to discounts after the delivery day for SHFE current-month copper contracts on April 16th. However, overall supply will still exceed demand.