SMM Copper Market Daily Review (2012/10/10)

SHANGHAI, Oct. 11 (SMM) – As LME copper prices surrendered gains overnight, SHFE 1301 copper contract, the most active one, started RMB 360/mt down at RMB 58,930/mt Wednesday. Following the opening, as longs and shorts conducted severe struggles, SHFE copper prices moved narrowly around the 20-day moving average of RMB 58,900/mt, with a fluctuating band of merely about RMB 100/mt, but met great resistance at the RMB 59,000/mt mark. In the afternoon, as LME copper prices slipped, and as Chinese A-shares reversed earlier gains, SHFE copper prices drifted down to around RMB 58,800/mt, touching a low at RMB 58,700/mt. SHFE 1301 copper contract finally settled RMB 430/mt or 0.73% lower at RMB 58,860/mt, with trading volumes down by 98,730 lots but positions up by 2,680 lots. SHFE copper prices suffered increasing technical pressure upside but still found some support at the lows.

SHFE copper prices fluctuated weakly after starting down, so spot copper discounts narrowed to negative RMB 20-150/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 58,950-59,030/mt, and RMB 59,050-59,130/mt for high-quality copper. Overall spot copper supply was stable, but the price gap between SHFE 1210 and 1211 copper contract fell. Some traders bought high-quality copper, which increased its price differential with standard-quality copper. Downstream producers sourced to need, but overall market activity improved some. In the afternoon, as SHFE copper prices came under pressure further, high-quality copper cargo-holders in spot markets exhibited unwillingness in moving goods at prices below RMB 59,000/mt, but offers were virtually flat with morning levels. Standard-quality copper was not favored and its discounts expanded along with falling SHFE copper prices, widening its price differential with high-quality copper to nearly RMB 200/mt. Mainstream spot copper discounts were negative RMB 30-230/mt in the afternoon, with those for high-quality copper were negative RMB 30-50/mt, and negative RMB 180-230/mt for standard-quality copper. Traded prices declined to RMB 58,800-59,000/mt in the afternoon, with bearish sentiment growing in markets.