Spot copper in Shanghai was quoted at a contango of RMB 0-70/mt and a backwardation of RMB 0-50/mt over SHFE 1308 copper contract on Monday. Traded prices were RMB 52,180-52,320/mt for standard-quality copper, and RMB 52,280-52,450/mt for high-quality copper. Backwardation continued to narrow. Some speculators continued to sell at highs. Middlemen largely held to the sidelines, while downstream producers bought as needed in response to high prices. In the afternoon, speculators sold goods actively on rising SHFE copper, with spot copper quoted at a contango of RMB 0-80/mt. Traded prices increased slightly to RMB 52,300-52,550/mt, and price gap between high-quality and standard-quality contracted to less than RMB 50/mt. Trading was light with oversupply pressure increasing. 

 

The most recent SMM survey reveals that 65% of market players expect LME copper to hold stable above USD 7,250/mt and break through USD 7,300/mt this week, and SHFE copper to cross above RMB 52,500/mt. US housing and retail sales data will be released this week, and market will be boosted if these data are reported positive as expected. Besides, China’s upbeat economic data will continue to influence the market in the short term. In addition, the increasing buying for copper both at home and abroad is bolstering copper prices. Crude oil and gold prices also recovered, giving guides to copper price trends. Domestic A-shares returned to above 2,100 on Monday, and positions for funds showed increase for a fourth straight month, driving up copper prices. Moreover, SHFE copper may see a shift of most-traded contracts, which may help enliven SHFE three-month copper contract and buoy copper prices. In spot copper markets, with the approach of delivery date, cargo holders may hold prices firm, given support to copper prices. 

 

35% of market players believe copper prices will hold steady this week, with LME copper hovering at USD 7,200/mt and SHFE copper at around RMB 52,000/mt. The US dollar index rebounded after earlier losses, and showed a sign of rising further. This may impose a ceiling on any copper price increase. Besides, RMB 86 billion of three-year Central Bank Bill will mature this year. As the central bank issued another RMB 183.8 billion of three-year Central Bank Bills in July, some investors concerned it may continue to issue bills to freeze the capital expected to mature. Thus, trading activity may be constrained this week, negatively affecting stock and futures markets. In China’s spot copper markets, the continuous rallies in copper prices leave downstream buyers unwilling to purchase, with premiums for spot copper falling. In this context, these investors expect copper prices to consolidate this week.