SMM Daily Review – 2012/4/25 Copper Market

SHANGHAI, Apr. 26 (SMM) – The most-traded SHFE copper contract for delivery in July opened RMB 170/mt higher at RMB 57,700/mt Wednesday. SHFE copper prices lacked momentum to rebound continuously during the day and only touched a high at RMB 57,750/mt, as both long and short investors cut positions significantly. The lowest SHFE copper price was RMB 57,520/mt Wednesday. SHFE 1207 copper contract finally ended at RMB 57,590/mt, up RMB 60/mt or 0.1%. Trading volumes and positions for SHFE 1207 copper contract decreased by 230,000 lots and 14,514 lots, respectively, while positions for SHFE 1208 copper contract increased by 4,324/mt, highlighting the shift of the most actively-traded copper contract. Due to uncertainties in short-term copper price trends, speculative interest was low, and market activity for all SHFE copper contracts was extremely lackluster, with total trading volumes only standing at 370,000 lots. SHFE copper prices will continue to test support at the 5- and 10-day moving averages.

As SHFE copper prices rebounded slightly, some hedged copper was locked. The SHFE/LME copper price ratio slid further, so cargo-holders of imported copper chose to withhold goods, leading to a drop in spot copper supply. Mainstream spot copper discounts were thus quoted between negative RMB 60-0/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,530-57,570/mt, and RMB 57,570-57,650/mt for high-quality copper. The price gap among all SHFE copper contracts remained nearly zero, leaving no speculative room. Due to uncertainties in future copper price trends, downstream producers continued to keep cautious. Market activity stagnated as a result. In the afternoon session, SHFE copper prices continued to fluctuate, and spot copper consumption was not seen to improve at all, causing spot copper discounts to rise to between negative RMB 80-30/mt, while traded prices held onto the morning business levels.