SHANGHAI, Jul. 26 (SMM) – As LME copper extended sluggishness overnight, SHFE 1211 copper contract, the most active one, started RMB 450/mt down at RMB 54,100/mt Wednesday. After the opening, the contract pared some of losses as LME copper prices rebounded on a falling US dollar index owing to technical resistance, and gradually climbed to a high RMB 54,650/mt, up from the daily moving average. Nevertheless, as LME copper prices retreated in the afternoon, the contract dropped below the daily moving average, and gained the falling momentum after dipping below the RMB 54,000/mt point, to as low as RMB 53,600/mt. Finally, the most active copper contract for November delivery settled RMB 920/mt or 1.69% lower at RMB 53,630/mt, with trading volumes and positions increasing by 11,932 lots, and 41,834 lots, respectively. Selling pressures grew after SHFE copper prices slipped below RMB 54,000/mt, and bearish sentiment also piled up. From technical indicators, SHFE copper prices have moved away from recent moving averages and are likely to fall further in the immediate future.
SHFE copper prices started down in the morning and helped cargo-holders of hedged copper in spot markets sell for cash. As the SHFE/LME copper price ratio improved further, cargo-holders of imported copper chose to reduce premiums to move goods. The price gap between imported and domestic copper widened. Spot copper premium quotes were between positive RMB 80-150/mt in the morning business. Traded prices for standard-quality copper were between RMB 54,850-54,900/mt, and RMB 54,900-55,000/mt for high-quality copper. Spot copper supply kept sufficient during the whole day. Near the midday, copper prices edged up, but spot copper premiums were little changed. Short-term traders met resistance to move goods, restricting market transactions. Downstream producers stuck to their source-to-need strategy, but overall market transactions were limited in the morning. In the afternoon, as SHFE copper prices retreated by over RMB 500/mt, hedged copper flew into spot markets in large quantities. However, spot copper premium quotes rose marginally in the afternoon, up to positive RMB 100-170/mt, while traded prices dropped to RMB 54,550-54,800/mt, with almost no downstream producers entering markets to buy amid growing bearish sentiment.