SMM Copper Market Daily Review (2014-11-12)

SHANGHAI, Nov. 13 (SMM) – Copper for January delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 47,000/mt during Tuesday’s night session, and then hovered narrowly around the opening mark. The price of the SHFE 1501 copper contract later tracked LME copper up to close up RMB 130/mt at RMB 47,400/mt. During the night session, trading volumes for the most active contract totaled some 100,000 lots, and positions were essentially unchanged.

On Wednesday, SHFE copper initially hovered around RMB 47,400/mt, reaching as high as RMB 47,500/mt, but fell at the tail of the trading to end up RMB 50/mt, or 0.11%, at RMB 47,320/mt. Trading volumes for the SHFE 1501 copper contract added by 39,152 lots, but positions shed by 756 lots.

Physical copper in Shanghai was quoted Wednesday at a RMB 0-60/mt discount to the SHFE 1411 copper contract. Traded prices were RMB 48,030-48,100/mt for standard-quality copper and RMB 48,050-48,150/mt for high-quality copper.

The price gap between the SHFE 1411 and 1412 copper contracts remained high at approximately RMB 300/mt, giving cargo holders an incentive to sell. At the same time, a larger quantity of imported copper flowed in the market after the SHFE/LME copper price ratio improved. Middlemen turned less willing to buy with few arbitrage opportunities available, while downstream producers stayed out of the market, leaving modest trading activity on Wednesday.

Copper supply increased during the afternoon trading, with a higher proportion of high-quality copper in the market. As a result, physical copper was quoted lower at a RMB 20-120/mt discount and traded at RMB 48,000-48,120/mt.