SMM Daily Review – 2012/5/18 Copper Market

SHANGHAI, May 21 (SMM) – As LME copper fell overnight, SHFE 1209 copper contract opened RMB 140/mt down at RMB 54,950/mt last Friday. LME copper prices sank after meeting resistance at USD 7,700/mt during the day, and Chinese stock markets gave up all the previous day’s gains. In this context, SHFE 1209 copper contract fluctuated in a wide band, came under pressure at the 5-day moving average of RMB 55,480/mt, but slid rapidly in the afternoon to as low as RMB 54,810/mt. Finally, SHFE 1209 copper contract still settled RMB 140/mt or 0.25% higher at RMB 55,230/mt, with trading volumes and positions increasing by 182,000 lots and 21,588 lots, respectively. The struggle at RMB 55,000/mt between longs and shorts was severe, and short-term shorts began to return to markets. SHFE copper prices were likely to test RMB 55,000/mt repeatedly for the foreseeable future in the face of selling pressures and technical resistance.  
  
SHFE copper prices were volatile, but cargo-holders in spot markets stabilized their sale volumes and insisted on firm price quotes, still showing reluctance to move goods at the lows. Quotations for spot copper premiums were thus between positive RMB 200-250/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,900-56,100/mt, and RMB 55,950-56,200/mt for high-quality copper. Downstream producers stuck to the sidelines at prices above RMB 56,000/mt, but most transactions were made at above this price mark. In the afternoon session, as SHFE copper prices edged lower, and as spot copper supply decreased, spot copper premium quotes rose further to positive RMB 230-300/mt. However, traded prices fell in the afternoon, but market transactions were extremely limited. SHFE copper stocks were reported to decrease by 13,635 mt to 173,814 mt last Friday, which highlighted downstream producer strong interest in buying at the lows during the week and should support high spot copper premium levels in the coming week.