SHANGHAI, Oct. 22 (SMM) –SHFE copper prices fluctuated due to mixed domestic economic data. The September CPI and PPI in China were both down, which hurt market confidence, but China's 3Q GDP report later boosted sentiment and helped Chinese A-shares surge. SHFE copper prices fell on Monday and Tuesday, but gained support after falling to RMB 58,230/mt. Chinese A-shares rose by 1.27% on Thursday, which forced shorts to leave markets temporarily. In this context, the most active SHFE copper contract broke through resistance at the 20-day moving average before moving towards RMB 59,500/mt, with temporary support at RMB 58,500/mt.
Since SHFE 1210 copper contracts were delivered Last Monday, and since SHFE copper prices fell considerably, copper discounts returned to spot markets and enticed downstream buying and speculative activity. But SHFE copper prices rebounded following the delivery for SHFE 1210 copper contracts and spot copper cargo-holders were eager to move goods, causing copper discounts to expand all the way, up to RMB 250/mt from RMB 50/mt earlier in the week. Domestic copper smelters continued production during China's National Day holiday period, increasing copper stocks and later forcing smelters to move goods to generate cash. Cargo-holders of imported copper were also eager to sell since domestic copper prices proved more resistant to declines and since the SHFE/LME copper price ratio rose slightly. Spot copper supply was sufficient as a result. But downstream producers rejected higher copper prices and only bought at the lows, making market oversupply more pronounced.
In the coming week, SHFE copper prices will hold to RMB 58,200/mt, test support at all moving averages, and attempt to break through RMB 59,300/mt.