SMM Copper Market Daily Review (2014-4-29)

SHANGHAI, Apr. 30 (SMM) – The most active SHFE copper contract started Monday’s night session at RMB 47,840/mt, and then swung by less than RMB 100/mt. The contract still failed to rise above the RMB 48,000/mt mark during the session, and closed down at RMB 47,920/mt. Traded volumes held around 80,000 lots, while positions added 1,818 lots. On Tuesday, SHFE copper prices sank to RMB 47,800/mt by the midday after briefly testing resistance at RMB 48,050/mt. Dampened by the Shanghai Composite Index falling below the 2,000 level at some stage, the red metal dipped as low as RMB 47,580/mt, and ended Tuesday down RMB 280/mt, or 0.58%, at RMB 47,640/mt. Traded volumes and positions for the most active SHFE contract decreased by 64,958 lots and 11,784 lots, respectively. With regard to the SHFE 1408 contract, traded volumes lost 5,014 lots, but positions added 10,732 lots. SHFE distant-month copper contract prices are unlikely to rebound for the short term due to persistent selling pressure.

In the Shanghai physical market, copper was offered Tuesday at premiums of RMB 580-800/mt over the nearby SHFE contract. Traded prices were RMB 49,700-49,880/mt for standard-quality copper and RMB 49,850-50,050/mt for high-quality copper. After SHFE copper prices fell from highs, cargo holders significantly ramped up deliveries to raise cash ahead of the May Day holiday, with physical premiums down sharply. Speculators were cautious in entering the market, while downstream producers increased purchases. Supply growth, however, exceeded demand growth Tuesday, fueling angst among investors. As SHFE copper prices extended losses during the afternoon trading session, a larger number of downstream producers entered the market to hunt for bargains, with trading activity turning brisker. Transactions for standard-quality copper outperformed those for high-quality copper. Physical premiums initially hovered between RMB 650-800/mt, but later rose to the RMB 800-1,000/mt range, with traded prices down slightly to RMB 49,600-49,900/mt.