SMM Copper Market Daily Review (2013-3-29)

SHANGHAI, Apr. 1 (SMM) – LME copper tumbled overnight due to position liquidation, causing SHFE 1307 copper contract to open RMB 610/mt lower at RMB 54,900/mt on Friday. After its opening, the most active SHFE copper contract jumped to an intraday high of RMB 55,650/mt thanks to a wave of buying. SHFE copper for July delivery hovered near RMB 55,200/mt due to strong resistance at the 5-day and 10-day moving averages in the morning. In the afternoon, the most-traded SHFE copper contract fell below RMB 55,000/mt to an intraday low of RMB 54,720/mt. Finally, SHFE 1307 copper contract ended the day down RMB 680/mt or 1.23% at RMB 54,830/mt. Trading volumes increased 4,510 lots, while positions were also up 8,204 lots. Further price declines are expected.

Spot copper discounts were RMB 0-20/mt and premiums RMB 0-60/mt in Shanghai on Friday. Traded prices for standard-quality copper were between RMB 55,250-55,310/mt, and RMB 55,280-55,380/mt for high-quality copper. With LME market being closed today, the most active SHFE copper contract moved within tight ranges after opening lower. Cargo holders who suffered tight liquidity were anxious to sell, keeping premiums in check. Some middlemen entered the market due to imminent delivery of long-term contracts. High-quality copper was preferred by middlemen. Downstream producers, on the other hand, watched from the sidelines. SHFE copper prices fell again in the afternoon, leaving cargo holders reluctant to sell goods. Premiums were quoted higher at RMB 20-100/mt given limited supply, but traded prices slipped to RMB 55,100-55,200/mt. A few downstream buyers purchased in limited amounts. SHFE copper inventories were up 8,318 mt to 247,591 mt as of Friday due to the depressed buying interest and the large amount of imported copper.