SHANGHAI, Jan. 14 (SMM) – With LME copper prices fluctuating at highs overnight, SHFE 1304 copper contract, the most active one, opened RMB 350/mt up at RMB 58,850/mt last Friday. The contract continued rising following the opening and climbed to RMB 58,980/mt. However, as the NBS reported higher-than-expected CPI data for December, Chinese stock markets fell rapidly by nearly 2%. LME copper prices thus suffered resistance at highs and caused SHFE copper prices to reverse earlier gains before testing a low at RMB 58,400/mt in the afternoon. SHFE 1304 copper contract ended RMB 60/mt or 0.1% lower at RMB 58,440/mt, with trading volumes up 3,926 lots but positions down 11,218 lots. Long investors mostly took profit-taking at highs, an indication of caution over a continuous price rebound. SMM believes that SHFE copper prices will test support at the 5-day moving average for the foreseeable future.
SHFE copper prices suffered resistance to move higher owing to high-than-expected Chinese inflationary data, so some hedged copper was locked out of spot markets. This resulted in limited spot copper supply, helping copper discounts narrow. Shanghai spot copper discounts were largely between negative RMB 20-100/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,900-57,960/mt, and RMB 57,950-58,040/mt for high-quality copper. Cargo-holders became more willing to move goods at highs. Traders who had enough credit chose to buy, while downstream producers refrained from purchasing at prices above RMB 58,000/mt. Spot copper market activity was muted as a result. In the afternoon, with some hedged copper flowing out of markets and the price gap between SHFE 1301 and 1302 copper contract shrinking to less than RMB 200/mt, spot copper discounts were little changed from morning levels. But traded prices declined to RMB 57,700-57,920/mt, with market transactions still limited. SHFE copper stocks added by 2,638 mt to 209,096 mt last Friday.