SMM Copper Market Daily Review (2013-1-15)

SHANGHAI, Jan. 16 (SMM) – As LME copper prices lowered to test USD 8,000/mt overnight, SHFE 1304 copper contract, the most active one, started RMB 260/mt down at RMB 58,220/mt Tuesday. The contract hovered narrowly around RMB 58,200/mt following the opening, with long and short investors conducting severe struggles. However, LME copper prices lost USD 8,000/mt point in the afternoon, causing SHFE copper prices to slip below RMB 58,000/mt, down to test RMB 57,680/mt. SHFE 1304 copper contract finally ended RMB 780/mt or 1.33% lower at RMB 57,700/mt, with trading volumes and positions up 44,656 lots and 8,216 lots, respectively. Falling to levels seen in late December 2012 and with technical indicators pointing down, SHFE copper prices found weak support at the 20-day moving average and will test RMB 58,000/mt repeatedly for the near future.

As SHFE copper prices slid by around RMB 300/mt, hedged copper flew into spot markets and dominated spot copper supply. Cargo-holders insisted on firm prices during the last trading day for SHFE 1301 copper contracts, helping copper premiums increase during the second trading session. Shanghai spot copper offers were largely between discounts of negative RMB 20/mt and premiums of positive RMB 100/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,470-57,510/mt, and RMB 57,550-57,630/mt for high-quality copper. The price differential between SHFE 1301 and 1302 copper contracts was still roughly RMB 300/mt. Some traders took advantages to enter markets, while downstream producers bought as needed at lows, resulting in modest market transactions. In the afternoon, SHFE copper prices extended losses, but copper consumption remained slack, restricting upside room in copper premiums which were positive RMB 20-120/mt. Traded prices declined to RMB 57,300-57,550/mt in the afternoon.