SMM Copper Market Daily Review (2013-1-10)

SHANGHAI, Jan. 11 (SMM) – With LME copper prices still lacking directions overnight, SHFE 1304 copper contract, the most active one, opened slightly RMB 40/mt up at RMB 58,300/mt Thursday. Chinese stock markets were boosted by favorable Chinese trade data, helping LME copper prices rebound. In this context, SHFE copper prices rose all the way before reaching an intraday high at RMB 58,820/mt. SHFE 1304 copper contract ended RMB 520/mt or 0.89% higher at RMB 58,780/mt, with trading volumes and positions increasing 90,178 lots and 21,540 lots, respectively. Total trading volumes on the SHFE added by 136,000 lots, and total positions were up 26,228 lots. Bullish sentiment increased, and low-support for prices rose to RMB 58,200/mt. As such, SMM believes that SHFE copper prices will move towards RMB 59,200/mt for the foreseeable future.

SHFE copper prices rebounded, so some hedged copper was locked out of spot markets, leading spot copper supply to decrease. Cargo-holders thus narrowed discounts to move goods. Shanghai spot copper discounts were quoted between negative RMB 20-140/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,600-57,640/mt, and RMB 57,660-57,740/mt for high-quality copper. Speculators made purchases in small quantities ahead of deliveries for SHFE 1301 copper contracts, while downstream producers still conducted limited transactions. Hence, market deals were largely contributed by traders. In the afternoon, as SHFE copper prices continued moving up, hedged copper was still locked out of markets, leading spot copper supply to decrease further. Copper discounts thus held flat with morning levels, while traded prices rose to RMB 57,650-57,800/mt.