SHANGHAI, Jul. 16 (SMM) – China's CPI and PPI figures remained soft, while China's imports of unwrought copper and copper semis during June fell by nearly 20% MoM. In response the Shanghai Composite Index, fell by over 2.37% and below 2,200. Against this backdrop, SHFE copper prices opened lower last Monday and hovered around a 10-day moving average of RMB 55,100/mt. Later in the week, prices remained between RMB 54,800-55,500/mt, namely between the 10 and 20-day moving averages, with heavy pressure at a 60-day moving average mark of RMB 55,500/mt. As longs and shorts held increasing divergent views, total positions grew by 17,000 lots while total trading volumes fell by around 270,000 lots. The shift of the most active copper contract also began last week.
In last week's spot markets, imported copper flowed into markets again as the SHFE/LME copper price ratio rose above 7.3. Spot copper discounts thus grew although the delivery date for SHFE 1207 copper contracts neared. The price gap between imported copper and high-quality domestic copper widened, and domestic high-quality copper tried to hold premiums of RMB 100/mt but was then still heavily dampened. Traders dominated buying of spot copper and selling of copper futures contracts. Downstream enterprises remained cautious and continued to buy based on orders only, keeping overall transaction volumes modest.
In the coming week, SHFE copper will first test support at RMB 54,500/mt and then RMB 56,000/mt, which is near the 60-day moving average.