SMM Copper Market Daily Review (2013-1-18)

SHANGHAI, Jan. 21 (SMM) – With LME copper prices increasing above USD 8,000/mt overnight, SHFE 1304 copper contract, the most active one, started RMB 100/mt up at RMB 58,170/mt January 18. With positive Chinese economic data released, the contract hovered narrowly in the morning, with a fluctuating band of merely around RMB 100/mt. In the afternoon, SHFE copper followed Chinese A-shares and LME copper to touch a high at RMB 58,500/mt before suffering selling pressures at highs, with prices between RMB 58,300 -58,400/mt. SHFE 1304 copper contract finally closed RMB 660/mt or 1.14% higher at RMB 58,380/mt, with trading volumes down 1,110 lots but positions up 6,130 lots. Trading volumes and positions for SHFE 1305 copper contract added by 18,290 lots and 13,144 lots, respectively. This indicated that the most active copper contract tended to shift to SHFE 1305 copper contract. SHFE copper prices rallied above all recent moving averages following increases during the day, but faced great pressure at RMB 58,500/mt.
   
As SHFE copper prices rebounded, some hedged copper was locked out of spot markets, helping copper discounts stabilize between negative RMB 100-220/mt in the morning business. Traded prices for standard-quality copper were between RMB 57,580-57,640/mt, and RMB 57,650-57,720/mt for high-quality copper. Market players held divergence over future copper prices. Most cargo-holders chose to sell for cash ahead of the Chinese New Year holiday, while downstream producers still sourced to need at lows. Market deals thus were largely contributed by traders. In the afternoon, more hedged copper was locked out of spot markets now that SHFE copper prices drifted higher, with mainstream copper discounts between negative RMB 120-220/mt. Traded prices surged to RMB 57,650-57,800/mt in the afternoon, and downstream producers refrained from buying at highs, resulting in muted market activity. SHFE copper stocks decreased by 528 mt to 208,568 mt in the week ending January 18.