SHANGHAI, Mar. 4(SMM) – With LME copper sliding overnight, the most active SHFE 1306 copper contract opened RMB 500/mt down at RMB 57,200/mt last Friday. As China's two major PMI indexes came in soft, and since the Shanghai Composite Index dived by 1%, SHFE copper prices also marched down, searching support at lower prices after losing RMB 57,000/mt, with an intraday high at merely RMB 57,250/mt. In the afternoon, SHFE copper prices drifted down further, but stopped falling after testing RMB 56,610/mt. SHFE 1306 copper contract settled RMB 970/mt or 1.68% lower at RMB 56,730/mt, with trading volumes and positions up 91,184 lots and 24,614 lots, respectively. SHFE copper will look for support at lower prices over the short term, as selling pressures increased noticeably after prices lost the RMB 57,000/mt mark.
SHFE copper prices slid significantly and caused hedged copper to enter spot markets, leading spot copper supply to increase. Shanghai spot copper discounts were quoted between RMB 100-220/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,300-56,620/mt, and RMB 56,400-56,750/mt for high-quality copper. Discounts were unable to narrow in the morning, but market activity improved as downstream producers bought at lows. Copper discounts, though, shrank near the midday when SHFE copper prices shed by nearly RMB 1,000/mt, but cargo-holders shifted to the sidelines. Market pessimism was growing again, and market activity became muted. Overall market transactions dropped after initially rising in the morning as market surplus remained. In the afternoon, with SHFE copper extending losses and the price gap among SHFE copper contracts narrowing, spot copper discounts shrank to RMB 80-180/mt. Traded prices in the afternoon were little changed from morning levels, and market activity remained lackluster. SHFE copper stocks added by 18,492 mt to 226,201 mt last Friday now that downstream consumption was not seen to pick up noticeably. Copper's weak fundamentals side will weigh on overseas and domestic copper prices.