SHANGHAI, Jun. 9 (SMM) – Last Friday, the US nonfarm payroll data for May were reported above expectation, rising 217,000 jobs, and the unemployment rate remained at its lowest since September 2008 of 6.3%. The rate has remained above 7% for seven months. The upbeat data indicated the country has emerged from the implications of frigid winter. The labor force participation rate remained at 62.8% in May. Standard & Poor’s affirmed its “AA+” rating on U.S. long-term unsolicited sovereign credit, saying its outlook on the long-term rating remained stable. These factors pushed the Dow and S&P 500 up to new highs.
LME copper, however, failed to gain traction from these optimistic data due to Qingdao port’s investigation into metal financing which was believed to impair China’s metal trades. LME three-month copper suffered sell-offs and tested a low of USD 6,640/mt before closing at USD 6,708/mt, down USD 74/mt. The cash-to-three-month backwardation in LME copper fell to USD 3/mt.
During the night session last Friday, SHFE 1408 copper contract prices started lower at RMB 47,820/mt dragged by LME copper, but regained some losses and closed the session at RMB 47,960/mt, down RMB 250/mt. Traded volumes for the most active SHFE copper contract soared to 220,000 lots, while positions increased 518 lots.
On June 9, the SHFE copper for August delivery may trade at RMB 47,600-48,200/mt. Physical copper in China will be quoted at premiums of RMB 150-280/mt over SHFE 1406 copper contract prices with oversupply pressure mounting.