SMM Daily Review – 2012/7/24 Copper Market

SHANGHAI, Jul. 25 (SMM) – As LME copper extended weakness overnight, SHFE 1211 copper contract, the most active one, started RMB 470/mt down at RMB 54,300/mt Tuesday. After the opening, the contract continued to fluctuate around the opening price and touched a low at RMB 54,170/mt. During major trading hours, the HSBC announced that the HSBC China manufacturing PMI rose from the previous data and lifted LME copper prices. However, as there was no substantial buying, and as Chinese stock markets remained sluggish, SHFE copper prices merely edged up from the daily moving average, came under clear pressure at the previous session’s settlement price RMB 54,800/mt, and basically hovered around RMB 54,700/mt in the afternoon. At the tail of trading though, short selling appeared again and pressured SHFE copper prices down below the daily moving average again and returning to around the opening price. Finally, SHFE 1211 copper contract closed RMB 270/mt or 0.49% lower at RMB 54,500/mt, with trading volumes decreasing by 106,000 lots but positions adding by 8,816 lots. SHFE copper prices gained increasing buying after slumping below RMB 54,000/mt, but it remains early to say prices will stop falling from this price mark.

SHFE copper prices hovered feebly after starting lower. Cargo-holders in spot markets were moving goods stably and kept spot copper supply sufficient. During major trading hours, HSBC China manufacturing PMI was reported to improve from the previous reading and helped SHFE copper prices pare some of earlier losses, leading spot copper premiums to fall. Mainstream spot copper premiums were quoted between positive RMB 60-180/mt in the morning business. Traded prices for standard-quality copper were between RMB 54,920-55,080/mt, and RMB 55,000-55,150/mt for high-quality copper. Downstream producers continued replenishing stocks at the lows, but overall market transactions were limited in the morning, largely contributed by traders. In the afternoon, as SHFE copper prices stabilized, spot copper cargo-holders continued selling aggressively and caused spot copper premium quotes to narrow to positive RMB 50-150/mt. Traded prices in the afternoon were virtually flat with the morning levels, but market activity became more lackluster.