SMM Copper Market Daily Review (2015-11-9)

SHANGHAI, Nov. 10 (SMM) – SHFE copper opened lower at RMB 37,800/mt on Monday and rallied to RMB 37,960/mt due to upbeat reading of US non-farm payrolls. Later, the contract ranged between RMB 37,870-37,920/mt and fell back to RMB 37,580/mt, to end at RMB 37,620/mt. Positions surged 40,614 to 321,632.

In Shanghai, spot copper traded between discounts of RMB 50/mt and premiums of RMB 10/mt on Monday, versus RMB 37,920-37,960/mt for standard-quality copper and RMB 37,930-38,000/mt for high-quality copper.

SHFE 1511 copper prices were higher than SHFE 1512 copper prices and this led to firm price offers at cargo holders. And buyers especially favored standard-quality copper, narrowing price gap with high-quality copper. Some traders were bullish towards spot copper and bought in a large number. Buyers were willing to sell at lows. Wait-and-see posture loomed market and transactions were contributed mainly by traders.

Bearishness looms market following LME copper fell below USD 5,000/mt last Friday. 67% industrial insiders expect LME copper to test a low of USD 4,915/mt this week and SHFE copper to drop below RMB 37,500/mt. US dollar surged to 99.35 due to positive reading of US non-farm payrolls last Friday. And recently, US Fed officials become more hawkish, boosting expectation for rate hike in December. This will weigh down base metals prices. US crude oil slumped 1.92% to USD 44.11/bbl last Friday, leading base metals prices to fall. Besides, according to CFTC report, position opening by shorts are more than longs on the SHFE market.

China’s import and export data for October released last weekend stayed weak with exports down 3.6% YoY and imports down 11.7% YoY. Markets expect China’s CPI and PPI figures due out Tuesday to be downbeat. China’s soft economy continues to depress base metals prices.

Previous maintenance at copper smelters is near the end and large smelters ramp up production for year’s target. And SHFE copper inventories increased 17,000 mt last Friday. Additionally, technical indicators also show signs of downside track. As such, copper prices should post a slip this week.

33% market players see LME copper to hover between USD 4,950-5,050/mt this week and SHFE 1601 copper to range between RMB 37,500-38,200/mt. Growing longs enter Chinese stock market and optimistic sentiment will extend to commodity market. Moreover, US dollar closed at a recent high last Friday and will lack rising strength this week due to absence of major figures from US and Europe. And downstream large buyers increase purchase following a slump in copper prices. Traders will rush to buy with the upcoming delivery date for SHFE 1511 copper. All those factors will help copper prices to head for stability.