SMM Copper Market Daily Review (2014-6-18)

SHANGHAI, Jun. 19 (SMM) – The most active SHFE copper contract stabilized above the RMB 48,000/mt mark during Tuesday’s night session, aided by a rebound in LME copper prices, and finished up RMB 60/mt at RMB 48,200/mt. During the night session, trading volumes for the contract maintained at some 60,000 lots, and positions added by 1,756 lots.

On Wednesday, SHFE copper prices fell back to the RMB 48,000/mt mark after meeting resistance at RMB 48,420/mt, surrendering all early gains, and ended down RMB 10/mt, or 0.02%, at RMB 48,130/mt. Trading volumes for the most active contract shrank by 12,068 lots, and positions gained by 2,072 lots. Trading volumes for the SHFE 1409 copper contract increased by 3,242 lots, and positions expanded by 4,824 lots. SHFE copper prices encountered resistance at the 20-day moving average, but are expected to rebound for the foreseeable future due to positive technical indicators.

In the Shanghai physical market, copper was offered Wednesday at a RMB 400-580/mt premium over the SHFE front-month copper contract. Traded prices were RMB 49,200-49,250/mt for standard-quality copper and RMB 49,300-49,450/mt for high-quality copper. Despite a fall in SHFE copper prices, cargo holders continued to hold prices firm, with physical premiums little changed. Downstream producers began entering the market to purchase low-price goods following the delivery date. Standard-quality copper and hydro-copper both were quoted at firm prices since they gained favor with market players on Wednesday. Middlemen also entered the market, with trading activity improving slightly. Physical premiums are not expected to fall in the near term.

A fall in SHFE copper prices during the afternoon trading session discouraged cargo holders from holing prices firm, with prices for high-quality copper brands lowered. Standard-quality copper and hydro-copper supplies were barely found in the market. The price gap between high-quality and standard-quality copper narrowed close to zero at the tail of the trading. Physical copper was largely quoted at RMB 420-550/mt premium and traded slightly lower at RMB 49,050-49,250/mt.