SMM Copper Market Daily Review (2014-6-12)

SHANGHAI, Jun. 13 (SMM) – The most active SHFE copper contract swung by around RMB 250/mt after starting Wednesday’s night session at RMB 47,550/mt, meeting resistance at RMB 47,780/mt, and ended down RMB 30/mt at RMB 47,650/mt. During the night session, traded volumes for the most active contract totaled some 100,000 lots, and positions decreased by 2,332 lots.

On Thursday, SHFE copper prices dipped to a low of RMB 47,450/mt during the afternoon trading session, and closed down RMB 220/mt, or 0.46%, at RMB 47,460/mt. Traded volumes for the most active contract contracted by 49,368 lots, and positions shrunk by 13,010 lots.

In the Shanghai physical market, copper was offered Thursday at a RMB 120-200/mt over the SHFE front-month copper contract. Traded prices were RMB 48,540-48,780/mt for standard-quality copper and RMB 48,580-48,840/mt for high-quality copper. After the SHFE 1406 lead contract prices rebounded sharply by more than RMB 100/mt, some middlemen entered the market to buy to satisfy demand from long-term contracts. Cargo holders were reluctant to move goods to hold prices firm. Physical premiums rallied appreciably due to decreasing supply, with standard-quality copper barely found in the market. Meanwhile, downstream producers mostly stayed on the sidelines, regarding copper prices as too high. Trading activity was quite on Thursday, with most transactions done among middlemen.

The SHFE front-month copper contract rose further during the afternoon trading session, widening the price gap between the SHFE 1406 and 1407 copper contracts. This gave cargo holders an incentive to maintain a high premium for quotations. There were still no outflows of standard-quality copper reported in the market, and some speculators purchased high-quality copper, driving down supply. Physical copper was largely quoted at a RMB 150-200/mt premium, and traded between RMB 48,780-48,900/mt. Premiums for some copper brands rose above RMB 300/mt at the tail of the trading, although no transactions were reported.