SMM Daily Review – 2012/5/31 Copper Market

SHANGHAI, Jun. 1 (SMM) – As LME copper extended the losing streak overnight, the most active SHFE copper contract for September delivery started RMB 10,00/mt lower at RMB 54,250/mt Thursday. The contract moved closely around RMB 54,400/mt before the midday as the severe struggle between longs and shorts continued unabated, with a fluctuating band only about RMB 150/mt. In the afternoon, a sliding US dollar index helped LME copper rally to around USD 7,500/mt, causing the contract to drift slightly higher to RMB 54,500/mt, but with a high at only RMB 54,640/mt. At the tail of trading, shorts accelerated the pace of selling, however, leading SHFE copper prices to gradually retreat to morning business levels. Finally, the most active copper contract settled RMB 820/mt or 1.48% down at RMB 54,530/mt, with trading volumes decreasing by 85,430 lots but positions increasing by 16,368 lots. Total positions for all SHFE copper contracts reached as high as 35,000 lots in the session. Longs and shorts will likely struggle at RMB 54,500/mt ahead of the weekends.

SHFE copper prices slumped by nearly RMB 1,000/mt, but cash generation kept spot copper supply sufficient at the month’s end. Hence, spot copper premiums quotes only rose marginally to between positive RMB 200-250/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,350-55,450/mt, and RMB 55,380-55,500/mt for high-quality copper. Some speculators with adequate cash chose to buy during the day, and downstream producers who were not troubled by cash problems also made appropriate purchases at prices below RMB 55,500/mt. However, overall market transactions were still not seen to increase during the last trading day of May. In the afternoon, as SHFE copper prices edged higher, mainstream offers for spot copper premiums narrowed to positive RMB 150-250/mt. The supply of standard-quality copper increased in the afternoon, but traded prices stayed flat with the morning levels.