SHANGHAI, Jun. 18 (SMM) – Boosted by the cut by China's central bank's to benchmark interest rates, the Shanghai Composite Index struggled around 2,300, but still rose by more than 1%. As the SHFE/LME copper price ratio continued to rise, SHFE copper fluctuated in the RMB 53,600-54,500/mt range last week, climbing as high as RMB 55,000/mt and posting a 2% gain. SHFE copper also broke through the 5-day moving average and gained solid technical support as the shift of the most active copper contracts began. With both longs and shorts mainly conducting intraday operations, total trading volumes for all SHFE copper contracts fell by nearly 1.5 million lots, while positions fell by almost 20,000 lots.
In spot markets over the past week, the price gap between SHFE 1206 and 1207 copper contracts remained around RMB 400/mt as the delivery day for SHFE 1206 copper contracts approached. The SHFE/LME copper price ratio rose to around 7.3, propelling cargo-holders in spot markets to move goods for cash.
Spot copper premiums fell all the way and turned into discounts Friday, down from RMB 200/mt, and discounts for standard-quality imported copper hit RMB 120/mt as copper prices rose above RMB 55,000/mt. Downstream producers stood on the sidelines, while some traders purchased copper due to discounts during the last trading day. But overall market transactions remained limited as overall market supply still exceeded demand.
SMM anticipates SHFE copper prices in the coming week will test the 20-day moving average and remain above RMB 54,500/mt before possibly rising to RMB 56,000/mt. SHFE 1210 copper contracts will become the most active copper contract in the coming week.