SHANGHAI, Jun. 11 (SMM) – As LME copper fell from initially rising overnight, the most active SHFE copper contract for September delivery started RMB 540/mt lower at RMB 53,430/mt last Friday. The Shanghai Composite Index lost 2,300 again, failing to be boosted by China's central bank's move in cutting interest rates, while LME copper was pressured down to USD 7,300/mt by an increasing US dollar index. SHFE 1209 copper contract thus slid, but gradually stopped falling at around RMB 53,000/mt, still coming under pressure at the daily moving average. Finally, the most active copper contract on the SHFE settled RMB 940/mt or 1.74% down at RMB 53,030/mt, with trading volumes and positions increasing by 128,000 lots and 6,784 lots, respectively. Trading volumes and positions for all SHFE copper contracts added by 197,000 lots and 28,342 lots, respectively, with growing selling pressures for forward copper contracts. The turnover rate for the most active copper contract reached as high as 185%. Support for SHFE copper at RMB 53,000/mt should be weak over the near term.
The PBOC's move in cutting interest rates failed to boost Chinese stock markets, so SHFE copper prices sank by over 1%. Spot copper premium quotes were between positive RMB 280-360/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 54,300-54,500/mt, and RMB 54,350-54,600/mt for high-quality copper. Cargo-holders held divergent views. Those who did not hedge against copper price volatilities refused to quote low prices, while imported copper cargo-holders sold aggressively for cash. Overall spot copper supply therefore was sufficient and diversified as well. Downstream producers, though, kept on their toes owing to pessimism towards future copper prices, leading to muted market activity in the morning. In the afternoon, although SHFE copper prices continued to come under pressure, spot copper premium offers failed to expand, while traded prices were noticeably lower than the morning business levels, between RMB 54,350 -54,450/mt. SHFE copper stocks were reported to decrease by 14,623 mt to 132,421 mt last Friday, indicating the fact that downstream producers became more willing to buy at the lows during the week. This may support domestic copper prices, which show more resilience than LME copper.