Explosives of Capital’s Increase, LME Copper Hits $7000 Record High

SHANGHAI, Oct. 16 (SMM)－Afternoon, LME Copper rocketed to $7,000 per tonne, setting new record high since August 5^th, 2017 during the session. Up to closure during the day, SHFE Copper 1712 Contract witness a 3.13% surge.

Ye Jianhua, SMM senior copper analyst, says after the holiday downstream and traders are restocking. With limited imported copper, traders are bullish at the price. With rise of premium of cathode copper, SHFE witness a market of “soft corners”. With Contract turning into BACK structure, the contract basis during recent months has been enlarged, thus causing the record new high of copper price. The capital promotes the price with both increase of price and positions of SHFE. The positions has increased by 200,000 hands. Concerning fundamentals of copper, the focus has been shifted to scrap copper since the second part of 2017. With stricter import policy, inspection of environment and VAT invoice, and upcoming ban of import of seven kinds scrap copper, the estimated shrinking supply of scrap copper and future copper mines’ shortage in supply, as well as the rising cost and demand of scrap copper due to green policy, these all boost the copper price firmly. But SMM thinks with the upcoming 19^th CPC National Congress, the price will meet a risk point, Need to be more prudent. No one hopes for sudden slump or surge of the price.

Zhang Huawei, from Dongwu Futures: For the short term, the supply and demand has not matched. Short supply leads to bullish capital. More capital flows in after key technical point was broken. Meanwhile, recently a lot of good news has been released for macro aspecy. The estimation of good policies after the upcoming 19^th CPC National Congress also promotes the bulls.

Luo Liang, from Shanghai CIFCO Futures, says the rise is technical rise to breaking the point. Copper has a large positions which reached 700,000 hands before the open of the day. Concerning distribution of the positions, positions of contracts of long-term are more even than other nonferrous metals. The additional positions today varies from recent months to future months, showing market’s optimistic attitudes toward the copper price. Value investing of the market is also another factor that promotes the copper price since the copper market has been in low spirit for a long time, compared with price rise of other industrial metals. Current fundamentals have changed market’s attitude, which probably means the second round of rise of copper market.

Besides, Xu Maili, from Guangda Futures, says the Ministry of Environmental Protection is researching a stricter policy for foreign waste import, which probably influences import of six major kinds of waste. The previous policy is to restrict import of seven kinds of scrap copper (annual import is 300,000 tonnes). The figure of the stricter policy is to influence six kinds of scrap copper (annual import is 1,000,000 tonnes). Once the policy is introduced, there will be great impact. Above policy has not certain schedule.

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