SMM Copper Market Daily Review (2015-10-20)

SHANGHAI, Oct. 21 (SMM) – The large drop in LME copper allowed SHFE copper to gap lower at RMB 39,110/mt on Monday night. The contract closed down RMB 330/mt or 0.84% with the session-high at RMB 39,220/mt and the session-low at RMB 39,050/mt. Positions grew 4022 to 252,302 with trading volumes only 150,000 lots.

SHFE copper grew slightly to RMB 39,290/mt with longs gathering strength on Tuesday but then fell back with a growth in positions. However, the red metal returned above moving average thanks to exit of shorts, resulting from Chinese stock growth, to close at RMB 39,200/mt, down by RMB 300/mt or 0.76%. Positions only increased 1,738 and fell 9,356 in the last 15 minutes. Positions of SHFE 1601 and 1602 were up 7,044 and 5,144, respectively.

On Tuesday, spot copper traded between discounts of RMB 50/mt and premiums of RMB 10/mt over SHFE 1511 copper in Shanghai, versus RMB 39,060-39,260/mt for standard-quality copper and RMB 39,080-39,300/mt for high-quality copper.

SHFE copper prices fell back gradually and cargo holders quoted at discounts of RMB 10-50/mt in the morning. This attracted traders to buy in spot market and sell in SHFE market. In the afternoon, spot prices followed SHFE copper down to a pre-holiday low. Thus, purchase interest of downstream buyers improved markedly, narrowing spot discounts slightly. High-quality copper returned to premiums of RMB 10/mt. Transactions improved noticeably in market but spot premiums were hard to be raised further with healthy supply.