SMM Copper Market Daily Review (2013-6-13)

SHANGHAI, Jun. 14 (SMM) – SHFE 1310 copper contract started Thursday RMB 110/mt lower at RMB 51,520/mt as LME copper tumbled during the three-day holiday in China. The most active SHFE copper contract sank to RMB 51,350/mt as the Shanghai Composite Index dived 3.5%, with resistance at RMB 51,960/mt. SHFE copper for October delivery moved within RMB 51,600-51,900/mt in the morning session before retreating to the daily moving average in the afternoon. Finally, SHFE 1310 copper contract ended the day at RMB 51,510/mt, down RMB 1,420/mt or 2.68%. Trading volumes and positions increased 122,000 lots and 54,658 lots, respectively. The most active SHFE copper contract is expected to slide further.

Spot copper in Shanghai was offered at a premium of RMB 10-150/mt over SHFE 1306 copper contract prices on Thursday. Traded prices for standard-quality copper were between RMB 52,500-52,550/mt, and RMB 52,550-52,700/mt for high-quality copper. SHFE 1310 copper contract prices plummeted by close to 2%, creating opportunities for arbitrage. More imported copper flowed into the market due to the appreciable rebound in the SHFE/LME copper price ratio. This kept spot copper in abundant supply, sending premium all the way down. Middlemen held to a wait-and-see stance as the price gap between SHFE 1306 and SHFE 1307 copper contracts was RMB 200/mt. Downstream producers went bargain hunting following the three-day break. Imported standard-quality copper gained favor due to sharp slump in prices. In the afternoon, the price spread between SHFE 1306 and SHFE 1307 copper contracts expanded to RMB 300/mt. Spot copper supply was stable, but premium continued to fall. Mainstream quotations were reported at a premium of RMB 0-100/mt over SHFE 1306 copper contract prices, but traded prices were RMB 52,430-52,500/mt. The price gap between high-quality copper and standard-quality copper narrowed further. Some transactions were done at low prices.