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SMM Daily Review – 2012/5/24 Copper Market
May 25,2012 09:26CST
smm insight
Source:SMM
SHFE 1209 copper contract started RMB 60/mt lower at RMB 54,970/mt Thursday. Spot copper premium quotes to slide to positive RMB 250-330/mt in Shanghai in the morning business.

SHANGHAI, May 25 (SMM) – As LME copper extended the losing streak, the most active SHFE 1209 copper contract started RMB 60/mt lower at RMB 54,970/mt Thursday. LME copper lost USD 7,600/mt, and Chinese stock markets fell and came under pressure at the 5-day moving average, causing the contract to move lower after the opening. In the afternoon, as shorts imposed selling pressures again, trading volumes for the contract continued to increase but positions fell, with prices sliding to a low at RMB 54,550/mt. However, at the tail of trading, a falling US dollar helped LME copper rally and SHFE copper prices return above a key support at RMB 54,800/mt. Finally, SHFE 1209 copper contract closed RMB 120/mt or 0.22% higher at RMB 55,150/mt, with trading volumes and positions increasing by 112,000 lots and 2,372 lots, respectively. Trading volumes for all SHFE copper contracts added by 103,000 lots, but total positions fell by 6,554 lots, with growing divergence between longs and shorts at RMB 55,000/mt. SHFE copper exhibited resilience Thursday but will likely fall further for the foreseeable future as bearish sentiment dominates markets.

SHFE copper prices retreated, with SHFE 1206 copper contract losing RMB 56,000/mt completely. Coupled with prevailing selling pressures for forward copper contracts, cargo-holders in spot markets became more pessimistic over future copper prices and therefore became more willing to move goods. Spot copper supply increased in consequence, leading spot copper premium quotes to slide to positive RMB 250-330/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,750-55,870/mt, and RMB 55,800-55,930/mt for high-quality copper. Downstream producers stood on the sidelines since they were also negative about future prices, so market transactions were not seen to increase in the morning. In the afternoon session, SHFE copper prices stopped falling, but spot copper premiums held with the morning business levels. Traded prices marched lower to RMB 55,700-55,850/mt in the afternoon, while market activity remained muted.

 

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