SMM Copper Market Morning Review (2015-10-14)

SHANGHAI, Oct. 14 (SMM) – LME copper started Asian trading hours at USD 5,292/mt and then tested support at the 5-day moving average during European and US trading hours with crude oil prices falling from highs. Finally, LME copper ended down USD 51/mt at USD 5,250/mt. Positions increased 2,739 to 303,183 and trading volumes were around 12,884 lots. LME copper stocks in Asia declined 2,600 mt to 300,600 mt, showing signs of flowing into Chinese market.

A slip in LME copper allowed SHFE 1512 copper to start lower at RMB 39,700/mt on Tuesday night. SHFE copper tested a low of RMB 39,540/mt and later advanced to RMB 39,930/mt answering to crude oil prices. But later crude oil prices ended down almost 2% and this led to SHFE copper to retreat all the gains. Finally, the red metal closed RMB 120/mt or 0.3% lower at RMB 39,650/mt. Positions fell 302 to 231,454 with trading volumes around 185,000 lots.

Crude oil prices fell from highs, weakening market confidence. And it is believed that high SHFE/LME copper price ratio is behind the recorded-high imports of unwrought copper and copper semis instead of pickup in domestic consumption. China’s latest PPI and CPI figures should be closed eyed today.

LME copper is predicted to move in USD 5,200-5,260/mt during Asian trading hours.Chinese yuan tumbled again and SHFE/LME copper price ratio changed. SHFE copper should range between RMB 39,450-39,900/mt on October 14. Spot copper will trade between discounts of RMB 40/mt and premiums of RMB 20/mt against SHFE 1510 copper with the upcoming delivery date.