SMM Daily Review – 2012/7/10 Copper Market

SHANGHAI, Jul. 11 (SMM) – SHFE 1210 copper contract, the most active one, started slightly down by RMB 80/mt at RMB 55,100/mt Tuesday. After the opening, the contract climbed to a high at RMB 55,100/mt driven by some buying but was dampened following weak readings in China’s trade data and unwrought copper and copper semis import data. At the tail of trading, SHFE 1210 copper contract tracked LME copper to retreat below the daily moving average, down below the RMB 55,000/mt point to RMB 54,900/mt. Finally, SHFE 1210 copper contract settled RMB 160/mt or 0.29% at RMB 54,940/mt, with trading volumes and positions decreasing by 20,744 lots and 3,134 lots, respectively. While both longs and shorts exerted caution, resistance at both the 5-day moving average of RMB 55,500/mt and 10-day moving average will weigh SHFE copper prices down over the near term.

As SHFE copper rebounded marginally, the SHFE/LME copper price ratio rose to above 7.3, propelling imported copper cargo-holders to move goods aggressively. Spot copper supply thus increased significantly and slight copper discount quotes occurred, which dragged down high-quality copper. Spot copper offers were generally between discounts of negative RMB 20/mt and premiums of positive RMB 80/mt in the morning business. Traded prices for standard-quality copper were between RMB 55,630-55,730/mt, and RMB 55,670-55,830/mt for high-quality copper. The price gap between standard-quality imported copper and high-quality domestic copper widened, so traders chose to buy in spot markets and sell futures contracts. Downstream producers, though, continued to buy as needed. Market transactions were largely made by traders as a result. In the afternoon, SHFE copper prices dropped and helped spot copper premium quotes rise amid falling supply for high-quality copper, but standard-quality copper was favored by market participants and held the morning’s offers. Mainstream spot copper offers were between discounts of negative RMB 20/mt and premiums of positive RMB 100/mt in the afternoon, while traded prices declined to RMB 55,500 -55,830/mt.