SMM Daily Review – 2012/4/26 Copper Market

SHANGHAI, Apr. 27 (SMM) – As LME copper prices challenged USD 8,200/mt overnight, the SHFE copper contract for delivery in July opened RMB 150/mt higher at RMB 57,770/mt Thursday. SHFE copper prices trended higher after starting higher owing to position closings, but failed to break resistance at RMB 58,000/mt. SHFE copper prices thus only climbed to RMB 58,320/mt before finally settling at RMB 58,290/mt, up RMB 670/mt or 1.16%. Positions for SHFE 1207 copper contract fell by 15,720 lots, while trading volumes increased by 9,874 lots. Positions and trading volumes for SHFE 1208 copper contract added by 22,482 lots and 163,000 lots, respectively, highlighting the completion of the most actively-traded copper contract. Standing above the 5-day moving average, SHFE copper prices are likely to extend rebounds for the foreseeable future.

As SHFE copper prices extended rallies, spot copper discounts expanded to between negative RMB 80-40/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 57,700-57,780/mt, and RMB 57,750-57,850/mt for high-quality copper. Some long-term copper contracts came into markets as April ends, so spot copper supply increased from the prior day. The SHFE/LME copper price ratio, though, continued to slide, leaving speculative activity lackluster. Downstream producers were not seen to replenish stocks ahead of the May Day holiday, which caused market transactions to remain limited in the morning session. In the afternoon business, SHFE copper prices posted bigger gains, but cargo-holders in spot copper markets insisted on firm prices, causing spot copper discounts to hold flat with the morning business levels. Traded prices surged to between RMB 57,750 -57,900/mt in the afternoon trading, but market transactions failed to improve.