SHANGHAI, Aug. 14 (SMM) – The most active SHFE 1410 copper contract tested support at RMB 49,530/mt after starting Tuesday’s night session at RMB 49,820/mt, and finished down RMB 100/mt at RMB 49,630/mt. During the night session, trading volumes were around 110,000 lots, and positions gained by 5,772 lots.
On Wednesday, SHFE copper prices managed to hover around RMB 49,600/mt during the morning trading session, but later dipped to a trough of RMB 49,270/mt before ending down RMB 430/mt, or 0.86%, at RMB 49,300/mt. Trading volumes added by 66,588 lots, and positions increased by 11,202 lots. The price of the red metal has dropped below the 60-day moving average amid broader sell-offs and looks set to test support the RMB 49,000/mt mark for the near term.
In the Shanghai physical market, copper was offered Wednesday at a RMB 10-80/mt discount over the SHFE 1408 copper contract. Traded prices were RMB 49,820-50,100/mt for standard-quality copper and RMB 49,860-50,160/mt for high-quality copper.
As SHFE copper prices fell slightly, the price gap between the SHFE 1408 and 1409 copper contracts remained above RMB 250/mt. Cargo holders continued to convert goods into cash during the morning trading, while some speculative investors entered the market to buy physical copper while building short positions on the futures market.
After the SHFE front-month copper contract fell below the RMB 50,000/mt mark, down by more than RMB 300/mt, some arbitraged supply flowed in the physical market, adding to pressure from growing supply. A variety of imported copper brands were available in the market, with increasing hydro-copper brands and non-standard copper brands. Middlemen continued to buy low-priced goods, while downstream producers ramped up purchases after copper prices dropped below RMB 50,000/mt. Trading activity turned brisker, but pressure from rising supply also increased on Wednesday.
As SHFE copper prices hovered at low levels during the afternoon trading session, a small number of middlemen entered the market to buy, causing supply to decrease. Physical copper was largely offered between a RMB 50/mt discount and a RMB 20/mt premium and traded at RMB 48,830-50,000/mt.