SMM Copper Market Daily Review (2014-7-31)

SHANGHAI, Aug. 1 (SMM) – The most active SHFE 1410 copper started Wednesday’s night session at RMB 50,500/mt, finding support at RMB 50,300/mt, and closed up RMB 330/mt at RMB 50,510/mt. During the night session, trading volumes for the most active contract were around 80,000 lots, and positions surged by 11,004 lots.

On Thursday, SHFE copper prices initially met resistance at RMB 50,600/mt, and fell to a low of RMB 50,360/mt during the afternoon trading session. The price of the red metal leveled out at the tail of the trading to finish up RMB 320/mt, or 0.64%, at RMB 50,510/mt. Trading volumes for the SHFE 1410 copper contract added by 5,014 lots, and positions increased by 21,168 lots. SHFE copper prices look set to rise for the near term with positive technical indicators.

In the Shanghai physical market, copper was offered Thursday between a RMB 50/mt discount and a RMB 40/mt premium over the SHFE 1408 copper contract. Traded prices were RMB 50,600-50,650/mt for standard-quality copper and RMB 50,640-50,720/mt for high-quality copper. As SHFE copper prices rebounded on Thursday, cargo holders continued to hold prices firm in the last trading day of July. The price gap between standard-quality and high-quality copper narrowed to less than RMB 50/mt. Middlemen continued to buy low-priced goods, while downstream producers stayed out of the market, with slower trading activity. Nevertheless, most cargo holders expect physical copper to trade at a high premium in August.

As SHFE copper prices leveled out, cargo holders lowered premiums for high-quality copper due to sufficient supply. The price of some standard-quality copper, however, remained firm with the lack of supply in the market. Physical copper was largely offered between a RMB 30/mt discount and a RMB 20/mt premium, and traded at RMB 50,650-50,750/mt on Thursday.