SHANGHAI, Oct. 16 (SMM) – Copper for January delivery on the Shanghai Futures Exchange (SHFE), opened RMB 420/mt higher at RMB 52,300/mt Tuesday, as LME copper extended gains overnight. The contract hit a high of RMB 52,390/mt after opening, but then wiped out earlier gains as longs took profits and as the Shanghai Composite Index fell back slightly. In the afternoon trading session, the red metal tested support at RMB 52,050/mt before closing the day at RMB 52,150/mt, up RMB 270/mt or 0.52%. Trading volumes and positions were off 124,000 lots and 1,334 lots, respectively. SHFE 1401 copper contract has found support at the 10-day moving average for the time being, but met resistance at RMB 52,500/mt as investors were cautious before delivery of SHFE 1310 copper contracts.
Spot copper in Shanghai was quoted at a contango of RMB 0-130/mt and a backwardation of RMB 0-50/mt over SHFE 1310 copper contract Tuesday morning. Traded prices were RMB 52,320-52,380/mt for standard-quality copper, and RMB 52,440-52,580/mt for high-quality copper. The price gap between SHFE 1310 and 1311 copper contracts narrowed to less than RMB 100/mt, prompting some to sell at lower prices. High-quality copper was quoted flat with SHFE current-month contracts, while standard-quality copper was offered at contango. Lower prices enticed some traders to go bargain hunting. However, offers rose in the second trading session, deterring downstream producers from buying. In the afternoon, price spread between SHFE 1310 and 1311 copper contracts continued to fall. Cargo holders were inclined to raise backwardation for spot copper, with high-quality copper quoted at a backwardation of RMB 100-120/mt over the SHFE 1310 copper contract price. However, the low buying interest against higher prices led quotes to drop to the range between a contango of RMB 0-20/mt and a backwardation of RMB 110/mt. Traded prices were RMB 52,300-52,500/mt. Transactions were limited, and some goods holders started to offer prices based on SHFE 1311 copper contract price. Spot copper is expected to be offered at a backwardation of RMB 100/mt against the SHFE copper for November delivery Wednesday after the contract became the current-month contract.