SHANGHAI, Jul. 16(SMM) – SHFE 1210 copper contract, the most active one, started slightly higher by RMB 40/mt at RMB 55,150/mt last Friday. After the opening, the contract continued to hover narrowly around the daily moving average with a low at RMB 55,110/mt. Later, China announced its GDP for 2Q fell as market expected, but retail sales data for June was better than anticipated, sending the Shanghai Composite Index climbing to nearly 2,200. Coupled with some buying, SHFE copper prices moved higher but retreated rapidly to around RMB 55,400/mt after temporarily soaring through the 60-day moving average, as upside technical resistance came in. SHFE 1210 copper contract stabilized above the daily moving average in the afternoon and followed LME copper to rise to a high of RMB 55,790/mt at the tail of trading, expanding daily gains. Finally, the most active copper contract for October delivery ended RMB 660/mt or 1.2% up at RMB 55,770/mt, with trading volumes and positions falling by 8,154 lots and 2,762 lots, respectively. SHFE copper prices stood above their 60-day moving average after business was closed while waiting for guidance from LME copper.
China's GDP data and other economic data continued to fall and raised market speculation the government would ease monetary measures further. Cargo-holders in spot markets thus sold aggressively when SHFE copper prices inched higher, keeping market supply both diversified and sufficient. As a result, spot copper premiums narrowed and standard-quality imported copper even traded at discounts, while high-quality copper also reported discount quotes near the midday. Mainstream spot copper offers were between discounts of negative RMB 50/mt and premiums of positive RMB 50/mt in the morning. Traded prices for standard-quality copper were between RMB 55,600-55,660/mt, and RMB 55,650-55,750/mt for high-quality copper. Some traders continued to buy spot copper and sell copper futures contracts before SHFE 1207 copper contract was delivered, while most downstream producers stood on the sidelines owing to doubts over a continuous copper price rebound. Overall market transactions, though, improved marginally. In the afternoon, as SHFE copper prices extended rebounds, cargo-holders of high-quality copper offered premiums of positive RMB 0/mt and even slight discounts, while discounts for standard-quality copper widened. Mainstream spot copper offers were between discounts of negative RMB 80/mt and premiums of positive RMB 0/mt in the afternoon, while traded prices marched slightly higher to RMB 55,700 -55,800/mt, with market transactions restricted at the highs. SHFE copper stocks added by 5,691 mt to 16,028 mt last Friday, as copper supply increased sharply owing to the rising SHFE/LME copper price ratio and the approach of the delivery date for SHFE 1207 copper contract, and since downstream producers made limited purchases while traders largely contributed to market transactions.