SHANGHAI, May 28 (SMM) – Chinese Premier Wen Jiabao stressed the priority of the government would be to maintaining growth, helping Chinese stock markets stabilize. SHFE copper showed strong resilience and helped the SHFE/LME copper price ratio rise. However, growing selling pressures later in the week at around RMB 56,000/mt caused SHFE copper prices to fall back to a low of RMB 54,550/mt. Trading volumes for the most active SHFE 1209 copper contract grew by 925,000 lots, while positions increased by around 70,000 lots. The price gap between near-term and forward copper contracts remained above RMB 600/mt as markets generally sold forward copper contracts.
In spot markets over the past week, price quotes from cargo-holders fell after initially rising. Spot copper premiums were as high as RMB 300-320/mt earlier in the week, with cargo-holders expressing a reluctance to move goods. However, as copper prices retreated further, some traders were more eager to sell to generate cash, causing spot copper premiums to shrink. As the SHFE/LME copper price ratio rose to around 7.25, imported copper volumes also grew into slight market surpluses. Downstream producers stayed out of the market after heavy purchasing at lower prices the previous week.
With weak support at RMB 55,000/mt and growing bearish sentiment, SHFE copper prices will likely fall to RMB 54,000/mt and remain below the 5-day moving average in the coming week.