SHANGHAI, Jan. 21 (SMM) –The Shanghai Composite Index repeatedly tested 2,300 last week, but remained volatile. SHFE copper prices slid from RMB 58,600/mt to RMB 57,600/mt, a decline of 1.7%. With long and short investors struggling at RMB 58,000/mt, SHFE copper prices proved more resistant to declines than LME copper, which helped the SHFE/LME copper price ratio rise to around 7.27.
In spot markets last week, with the price gap between SHFE 1301 and 1302 copper contracts expanding to RMB 300/mt before delivery of SHFE 1301 contracts, spot copper cargo-holders attempted to raise premiums to RMB 100/mt. However, premiums were brief and copper discounts returned to between RMB 100-200/mt following the delivery for SHFE 1301 copper contracts. Speculators bought spot copper and sold SHFE copper contracts. Domestic standard-quality copper cargo-holders were unwilling to move goods and insisted on firm prices, limiting discounts. Downstream producers still bought as needed, and only some speculators took the opportunity to enter markets. As a result, most market transactions were between traders.
With support consolidating at RMB 57,800/mt and growing market confidence over future copper prices, SHFE copper prices will likely to fluctuate around RMB 58,500/mt in the coming week.