SMM Daily Review – 2012/6/5 Copper Market

SHANGHAI, Jun. 6 (SMM) – As the US dollar index lost the 10-day moving average overnight, the most active SHFE copper contract for September delivery started RMB 540/mt up at RMB 53,470/mt Tuesday. After the opening, as shorts closed positions, the contract stabilized gradually and touched a high at RMB 53,680/mt, with a fluctuating band of RMB 200/mt. Chinese stock markets stopped falling during the day, also providing support for SHFE copper prices. At the tail of trading, the contract slid below the daily moving average and narrowed daily gains. Finally, the most active copper contract settled RMB 560/mt or 1.06% higher at RMB 53,490/mt, with trading volumes and positions decreasing by 349,000 lots and 25,234 lots, respectively. Without guidance from the LME, both longs and shorts kept wary of operations, leading to a considerable drop in trading volumes. SHFE copper will continue to fall for the near term. 
 
SHFE copper prices rebounded by over 1%, but cargo-holders in spot markets were still negative about future prices and thus stepped up sale volumes, leading to an increase in market supply. In consequence, spot copper premiums slid all the way. Spot copper premiums were quoted between positive RMB 260-330/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 54,550-54,670/mt, and RMB 54,580-54,700/mt for high-quality copper. Downstream producers were skeptical about copper price rebounds and mostly chose to stand on the sidelines following some purchases at the lows the previous day. Hence, market transactions remained limited. In the afternoon session, SHFE copper prices stabilized at relatively highs, but spot copper supply remained sufficient, causing spot copper premium quotes to fall to positive RMB 230-320/mt. The price gap between standard and high-quality copper widened noticeably in the afternoon business, and traded prices were little changed from the morning business levels.