SMM Copper Market Daily Review (2015-5-11)

SHANGHAI, May 12 (SMM) – The July-delivery SHFE copper dipped to a low of RMB 45,570/mt Monday and stayed near RMB 45,660/mt in the afternoon. The prices rose at the tail of trading and closed at RMB 45,790/mt, down RMB 100/mt. Trading volumes increased 24,164 lots, and positions dropped 5,514.

Spot copper quoted between a RMB 10/mt discount and a premium of RMB 50/mt to SHFE 1505 copper contract in Shanghai early May 11. Standard-quality copper traded at RMB 45,800-45,820/mt, and high-quality copper sold for RMB 45,820-45,880/mt.

Cargo holders offered prices on par with last Friday early on Monday. Later, some traders sourced standard-quality copper in the market, and supply of the product tightened. Thus, standard-quality copper was offered at a slight premium to SHFE 1505 copper contract prices. Spot trades improved some as downstream producers bought on dips.

SMM survey indicates that 68% of industry insiders expect copper prices to move sideways this week, considering limited economic releases. Besides, the US dollar index is expected to move higher and spot prices in Chinese market will be largely affected by the spread between SHFE 1505 and 1506 copper contracts before delivery date, limiting the increase in copper prices. Thus, these players believe LME copper will trade at USD 6,350-6,430/mt and SHFE copper at RMB 45,500-46,100/mt.

12% of industry participants remain bullish that LME copper will rise above USD 6,450/mt and SHFE copper will climb to RMB 46,200/mt. CFTC reported net short positions in Comex copper declined to 452 in the week ending May 5. In China, the one-month and three-month Shibor both hit the two-year low, heralding ample money supply. Meanwhile, China’s poor trade data again fueled expectation for more pro-growth measures. These factors, combined with continued decline in SHFE copper stocks, will proffer impetus to copper prices.

20% of industry insiders are bearish, noting that LME copper will fall below USD 6,300/mt and SHFE copper will test RMB 45,000/mt. These respondents argue that negative technical indicators and falling positions, especially a lack of buying, will weigh down copper prices.