SMM Copper Market Daily Review (2015-5-18)

SHANGHAI, May 19 (SMM) – The most active SHFE copper contract remained stable Monday morning but rose to RMB 46,190/mt in the afternoon, to end the daytime trading at RMB 46,110/mt, up RMB 180/mt. SHFE 1507 copper contract positions grew 278, and trading volumes increased 7,946 lots.

Spot copper was still offered at premiums of 30-130/mt to SHFE 1506 copper contract in Shanghai Monday morning. Standard-quality copper traded at RMB 46,040-46,140/mt, and high-quality copper sold for RMB 46,080-46,200/mt.

Cargo holders offered high premiums after expiration of SHFE 1505 copper contract, but sales were poor. Thus, spot premiums narrowed later. Activities of dealers increased, while downstream producers only watched from the sidelines and bought on needs.

74% of industry insiders survey by SMM see LME copper to stay at USD 6,350-6,450/mt and SHFE copper at RMB 45,600-46,300/mt this week. The US dollar index is expected to fall further due to the weak economic data. However, the increase in gold and crude oil has been blocked lately. Besides, markets are relatively positive about the manufacturing PMI to be released this week considering the high demand months of April and May, cooling expectation for more stimulus measures. Last but not the least, investors are losing interest in nonferrous metals, reflected by continuous falls in trading volumes of SHFE copper, which will leave copper prices directionless.

19% of market players expect LME copper to fall to USD 6,300/mt and SHFE copper to drop to RMB 45,000-45,200/mt, citing negative technical indicators and growing risks in China’s stock markets, as well as tightening liquidity resulting from this week’s new share listings.

Still, 7% of industry participants expect copper prices to increase, noting that maintenance at Chinese smelters have cut output by 12% in the past two months. This, combined with the arrival of high demand season and the firm spot premiums in China’s copper market, In addition, sharp declines in SHFE copper stocks may also bolster copper prices.