SMM Daily Review – 2012/6/7 Copper Market

SHANGHAI, Jun. 8 (SMM) – The most active SHFE copper contract for September delivery started RMB 380/mt higher at RMB 54,060/mt Thursday. The contract hovered narrowly between RMB 54,000-54,300/mt in the morning as longs and shorts competed severely, with a high at RMB 54,260/mt. However, as the Shanghai Composite Index lost 2,300 again in the afternoon, and as LME copper slipped swiftly to test USD 7,400/mt, SHFE 1209 copper contract moved lower gradually, retreating below the daily moving average. Reversing early gains, the most active copper contract finally ended at an intraday low of RMB 53,640/mt, down RMB 40/mt or 0.07%, with trading volumes and positions decreasing by 112,000 lots and 8,190 lots, respectively. The turnover rate for SHFE 1209 copper contract reached as high as 145% amid growing divergence between longs and shorts. SHFE copper prices found weak support at their 5-day moving average.

SHFE copper prices met resistance to rebound. Imported copper supply in spot markets continued to increase, keeping overall copper supply sufficient. Spot copper premiums were thus quoted between positive RMB 220-280/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,030-55,090/mt, and RMB 55,050-55,150/mt for high-quality copper. Traders chose opportunities to enter market in the morning, and some downstream producers also continued to buy at the lows. Near the midday, copper prices edged down, but spot copper market transactions were restricted. Transaction volumes on the spot copper market thus fell after initially rising. In the afternoon, SHFE copper prices slid rapidly by nearly RMB 400/mt, but actual consumption in spot markets was limited amid growing bearish sentiment, causing copper premium quotes to only rise marginally to positive RMB 240-320/mt. Nevertheless, traded prices dropped to RMB 54,750-55,050/mt in the afternoon, basically losing the RMB 55,000/mt point.