SHANGHAI, Aug. 11 (SMM) – SHFE copper fell immediately after opening Monday trading session and then tested RMB 37,540/mt. In the afternoon business, the price dropped to RMB 38,000/mt and followed Chinese stocks up, to finish up RMB 240/mt or 0.64% at RMB 37,990/mt. Trading volumes fell 87,610 lots and positions slipped 6,930.
Spot copper settled at a discount of RMB 20-70/mt against SHFE 1508 copper in Shanghai on Monday. Mainstream prices were RMB 38,180-38,240/mt for standard-quality copper and RMB 38,190-38,280/mt for high-quality copper.
Standard-quality and high-quality copper prices were lowered to excite trades and price gap between them disappeared. However, hydro-copper prices stayed firm thanks to shortage in supply. Few downstream buyers entered market early this week. Trades were thus mainly made between traders.
33% of industry insiders surveyed by SMM expect copper prices to fall to USD 5,120/mt and SHFE copper to slip to RMB 37,300/mt this week, partly basing their opinions on weak Chinese data, including declining copper imports. Besides, LME copper inventories have been growing for weeks and SHFE also reported copper stocks surged more than 10,000 mt last week. The rising copper stocks, combined with influx of imported copper, will bode ill for copper price.
Technically, both LME and SHFE copper prices have come under major moving averages, with other indicators pointing downwards. Continued spot discounts in China’s copper market also threaten to drag down futures prices.
60% of the respondents see copper prices to remain stable, with LME copper at USD 5,130-5,200/mt and SHFE copper in the RMB 37,500-38,200/mt range. US economic data were a mixed bag, which may leave the US dollar index hovering. In China, the foreign exchange reserves fell by USD 43 billion to USD 3.65 trillion, the lowest since August 2013. The People’s Bank of China intends to keep the yuan’s exchange rates stable when stock markets were volatile, which is helpful for stabilization of commodities.
The remaining 7% believe copper prices will rally this week, arguing that some investors will book profits after gaining from the US dollar, so the US dollar index is expected to edge lower. In addition, the PBOC announced to follow the current monetary policies, while China’s money supply (M2) growth was close to the full-year target and should speed up in the future. This may help with rebound in Chinese shares, in turn proffering impetus to copper prices.