SMM Copper Market Daily Review (2015-6-15)

SHANGHAI, Jun. 16 (SMM) – August-delivery SHFE copper contract dropped on Monday and touched RMB 42,170/mt in the afternoon before closing the daytime trading at RMB 42,210/mt, down RMB 510/mt. Positions grew 2,752, and trading volumes declined 95,014 lots.

SHFE 1506 copper contract closed at RMB 42,700/mt on its last trading day, with positions at 4,490.

Spot copper quoted between a discount of RMB 10/mt and a premium of RMB 40/mt to SHFE 1506 copper contract early Monday. Traded prices were RMB 42,780-42,840/mt for standard-quality copper and RMB 42,800-42,880/mt for high-quality copper. In the afternoon, cargo holders offered premiums of RMB 100-150/mt to SHFE 1507 copper contract.

Quotations were rarely heard in spot market in the morning. Spot premiums narrowed as transactions were hardly made at premiums of RMB 50/mt. Traders and downstream buyers waited after the June-delivery copper expires, as markets expect copper to be offered at premiums after SHFE1507 copper rolled over to the front-month contract. Trading was more brisk in the afternoon when SHFE copper declined.

64% of industry insiders surveyed by SMM expect copper prices to extend loss, with LME copper down to USD 5,800/mt and SHFE copper dipping to RMB 42,000/mt. Although the Fed is unlikely to announce an interest rate hike at the meeting this week, it may send clearer signal on the monetary policy. Meanwhile, Britain’s potential exit from the EU will deal a blow to London capital market and largely hit the GBP, in turn driving up the US dollar index. The strong dollar is believed to be the major drag on copper prices this week.

32% of them see copper prices to move sideways, citing a lack of capital inflows and financial pressure around mid-year. These industry participants expect LME copper to trade at USD 5,800-5,900/mt and SHFE copper at RMB 42,000-43,000/mt.

Only 4% of the surveyed are bullish that LME copper will rise to USD 5,900/mt and SHFE copper prices will stand above RMB 43,000/mt. These players noted that the maintenance at Chinese smelters and falling SHFE copper inventories will lend support to prices. Meanwhile, cargo holders will try to hold premiums up, also benefiting copper prices.