SMM Copper Market Daily Review (2015-5-25)

Published: May 26, 2015 10:12

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SMM survey indicates that half of the industry insiders expect copper prices to move sideways this week.

SHANGHAI, May 26 (SMM) –SHFE 1507 copper contract prices gapped lower at RMB 44,600/mt for night session last Friday and vacillated at RMB 44,520/mt. The prices increased slightly later and ended the session at RMB 44,720/mt.

The July-delivery SHFE copper treaded water during daytime trading Monday and closed down RMB 44,710/mt, down RMB 450/mt. Positions of SHFE 1507 copper contract decreased 13,646 and trading volumes increased 9,596 lots. SHFE 1508 copper positions grew 10,654.

Spot copper was still offered at premiums of RMB 20-90/mt to SHFE 1506 copper contract in Shanghai Monday morning. Standard-quality copper traded at RMB 44,780-44,820/mt, and high-quality copper sold for RMB 44,800-44,880/mt.

Hedged goods entered the market after SHFE copper tumbled, leaving ample supply in spot copper market. Spot premiums thus narrowed. Traders rarely bought spot goods, leaving trading muted.

SMM survey indicates that half of the industry insiders expect copper prices to move sideways this week, partly because the month-end financial pressure will affect copper trading. In addition, Chinese shares have been shored up by China’s pro-growth measures, and the unlocked capital will be a strong support to blue chips. The continued rises in stock market will benefit copper, but the resultant decline in trading volumes should leave copper directionless. As such, these players believe LME copper will trade at USD 6,150-6,280/mt and SHFE copper at RMB 44,500-45,000/mt.

43% of industry participants see downside risk, expecting LME copper to fall to USD 6,080/mt and SHFE copper to follow down to RMB 44,000/mt. These players based their views on hawkish remarks of Janet Yellen last week which gave a boost to the US dollar index, Final reading of the US GDP, durable goods orders, housing data and consumer confidence index should be released this week, and investors will ponder these indicators and look for a clue for the Fed’s interest rate hike. Moreover, these participants also pointed out that falling gold and crude oil will affect copper prices this week.

The remaining 7% are optimistic that LME copper will rise above USD 6,280/mt and SHFE copper will rebound to RMB 45,300/mt, benefiting from the rallying US shares and positive expectation for US data due out this week. Besides, the relatively high operating rates in copper fabricating sectors may leave copper consumption stable, also boding well for copper prices.

SHFE copper spot copper prices China copper price forecast

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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