SMM Copper Market Daily Review (2014-10-17)

SHANGHAI, Oct. 20 (SMM) – The most active SHFE 1412 copper contract hovered between RMB 46,830-47,210/mt during Thursday’s night session after starting at RMB 47,000/mt, and closed down RMB 540/mt at RMB 47,170/mt. Trading volumes for the most active contract surged to more than 300,000 lots, and positions shrank by 7,886 lots. Trading volumes for the SHFE 1501 copper contract spiked to some 200,000 lots, and positions gained by 30,896 lots.

On Friday, the SHFE 1412 copper contract initially advanced to RMB 47,360/mt, but dipped to 46,700/mt during the afternoon trading session before finishing down RMB 960/mt, or 2.01%, at RMB 46,300/mt. Trading volumes for the SHFE 1412 copper contract added by 38,348 lots, but positions contracted by 15,858 lots. Trading volumes for the SHFE 1501 copper contract expanded by 123,000 lots, and positions increased by 60,256 lots.

Physical copper in Shanghai was quoted Friday at a RMB 60-150/mt premium to the SHFE 1411 copper contract. Traded prices were RMB 47,550-47,750/mt for standard-quality copper and RMB 47,580-47,800/mt for high-quality copper.

As SHFE copper stretched losses, hedged goods flooded to the market. Speculative traders entered the market to buy low-priced goods, while downstream producers ramped up purchases after prices fell below RMB 48,000/mt. Cargo holders, however, withheld goods from sale at low prices. The price gap between inferior and high-quality copper brands narrowed further, with trading activity improving markedly on Friday.

As SHFE copper stretched losses during the afternoon trading session, physical copper was quoted mostly at a RMB 100-150/mt premium and traded slightly lower at RMB 47,450-47,730/mt. SHFE copper inventories for the week ending October 17 expanded 14,465 mt to 97,235 mt.