SHANGHAI, Jul. 7 (SMM) – SHFE 1509 copper contract prices slumped after opening on Monday dragged by heavy sell-offs, falling below RMB 41,000/mt. In the afternoon, the prices touched RMB 40,100/mt and closed at RMB 40,730/mt, losing RMB 1,580/mt. Trading volumes of the most active SHFE copper contract soared 264,000 lots and positions surged 35,642.
Spot copper was offered RMB 180-230/mt over SHFE 1507 lead in Shanghai on Monday. Traded prices were RMB 41,880-42,360/mt for standard-quality copper and RMB 41,900-42,380/mt for high-quality copper.
Price gap between SHFE 1507 and 1508 copper widened above RMB 300/mt. Cargo holders rushed to sell and some speculators booked profits. The large rise in imported copper supply drove spot premiums down. Hydro-copper prices were also cheap with many goods flowing into market. Both standard-quality and high-quality copper prices fell. Traders watched while downstream buyers waited for a further price fall, leaving trades softening.
As for price trends this week, 73% of industry insiders surveyed by SMM are bearish that LME copper will fall below USD 5,500/mt and SHFE copper will drop below RMB 40,000/mt. Result from Greece’s referendum showed voters there rejected a deal offered by the country’s creditors, triggering concern over a Greek exit from the euro zone and causing the euro to plummet. The US dollar index was driven up. In China, the government announced to suspend IPOs, helping ease the decline in China’s stock market. However, investors were still cautious, which led to a sell-off in copper market on Monday. Negative technical indicators and growing supply in Chinese spot resulting from the eagerness to sell among cargo holders will also bode poorly for copper prices.
27% of the surveyed see prices to move sideways this week, with LME copper at USD 5,550-5,750/mt and SHFE copper at RMB 40,200-41,500/mt. These respondents argued that despite a series of negative reports, SHFE copper inventories have been falling due to smelter maintenance and limited imports. Besides, some downstream producers may source goods in the market when copper prices near RMB 40,000/mt.