SMM Copper Market Daily Review (2013-3-6)

SHANGHAI, Mar. 7 (SMM) – As LME copper prices holding flat overnight, the most active SHFE 1306 copper contract opened slightly RMB 120/mt up at RMB 56,940/mt Wednesday. The contract broke through RMB 57,000/mt to challenge a high at RMB 57,150/mt, but then marched down all the way as short investors exerted more selling pressures, with prices touching a trough at RMB 56,640/mt. However, a strong Chinese A-share market during the day gave some support to the low-end copper price. SHFE 1306 copper contract finally settled at RMB 56,700/mt, still down RMB 120/mt or 0.21%. Trading volumes for the most active copper contract added by 10,458 lots, but positions fell 9,726 lots. SHFE copper prices suffered resistance at the 10-day moving average after breaking pressure at the 5-day moving average, but the KDJ indicator pointed upside. As such, SMM believes that SHFE copper prices will continue to consolidate at lows for the immediate future.

SHFE copper prices marched down after opening higher, but spot copper cargo-holders were still optimistic over future markets and expressed unwillingness in moving goods. Spot copper supply thus decreased noticeably and helped copper discounts narrow all the way, mainly between RMB 30-120/mt in the morning business. Traded prices for standard-quality copper were between RMB 56,580-56,680/mt, and RMB 56,620-56,740/mt for high-quality copper. Speculative interest weakened in the face of shrinking discounts, but downstream producers still bought as needed. Supply surplus eased marginally as a result. In the afternoon, with SHFE copper stop falling, spot copper cargo-holders opted to hold prices firm, causing copper supply to decrease further. Copper discounts thus continued to narrow, largely between RMB 0-70/mt. Traded prices were RMB 56,550-56,650/mt in the afternoon, but market trading was limited.