SMM Copper Market Daily Review (2014-4-25)

SHANGHAI, Apr. 28 (SMM) – The most active SHFE copper contract price started Thursday’s night session higher at RMB 47,260/mt, boosted by a sharp rebound in LME copper prices. The contract price later extended gains to hit a high of RMB 47,770/mt at the tail of the trading, and finished up RMB 770/mt at RMB 47,730/mt. Traded volumes for the most active contract soared to around 230,000 lots, while positions rose slightly to 2,920 lots. On Friday, SHFE copper prices rallied as high as RMB 48,020/mt after falling initially to RMB 47,300/mt, and ended up RMB 960/mt, or 2.04%, at RMB 47,920/mt. Traded volumes for the most active contract gained 198,000 lots, while positions shed 8,576 lots. Total traded volumes increased 355,000 lots, and total positions lost 27,584 lots.

In the Shanghai physical market, copper was offered Friday at a premium of RMB 1,150-1,300/mt over the nearby SHFE contract. Traded prices were RMB 49,600-50,000/mt for standard-quality copper and RMB 49,650-50,100/mt for high-quality copper. A sharp rebound in SHFE copper prices caused hedged supply tied up to the futures market, and physical copper supply decreased sharply, with premiums up to more than RMB 1,000/mt. Quotations for standard-quality copper were virtually the same as those for high-quality copper, while some middlemen entered the market, with a variety of brands gaining their favor. Downstream producers, however, considered present prices too high, and a majority of transactions were done by middlemen. Most market participants expect persistently high premiums next week since a short squeeze may resurface. As SHFE copper prices extended gains during the afternoon trading session, some speculators began moving goods, slightly inflating copper supply. Physical premiums narrowed a touch, but standard-quality copper traded instead at a higher premium of RMB 1,200-1,280/mt, with traded prices up to RMB 49,900-50,200/mt. Traded prices for high-quality copper hit above the RMB 50,000/mt mark. SHFE copper inventories fell last week sharply 27,321 mt to 105,156 mt due mostly to limited amount of imported copper and increasing downstream purchases.