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SMM Daily Review - 2010/1/13 Copper Market 

UPDATE: Chile Cochilco Sees Copper Averaging $3.10/Lb In 2010

SHANGHAI, Jan. 14 (SMM)&nbsp;-- On Wednesday, SHFE copper market opened down more than 3% or RMB 2,200/mt. SHFE three-month copper prices opened at RMB 59,500/mt, and rebounded steadily later after rapidly dropping to RMB 58,770/mt, with prices generally moving above the daily average. Prices reached as high as RMB 60,480/mt in the morning session, meeting resistance at RMB 60,500/mt, and prices ended at RMB 59,770/mt, down 2.8%. Both positions and trading volume experienced great declines in the morning, but positions for the SHFE three-month contract in the afternoon business increased slightly by 5,758 lots, with trading value reached RMB 113.7 billion. Positions for the SHFE 1005 copper contract continued to grow, up by 17,358 lots, and trading value expanded to RMB 48.1 billion. SHFE current month copper prices weakened as low as RMB 59,300/mt, and prices largely fluctuated highly around RMB 60,000/mt during the spot trading period, with prices ending lower at RMB 59,500/mt.
Spot copper market reported brisk trading sentiment. Market reported buying activities when prices showed signs of stabilizing. Premiums of high-quality copper were at positive RMB 100-150/mt. Supply of domestic standard-quality copper fell significantly due to plunging copper prices, with premiums reported at positive RMB 50-100/mt, closely following those for high-quality copper. Imported hydro-copper set premiums at positive RMB 0-50/mt, as holders of those products were eager to move goods from strong profits, paying little attention to the range of premiums. Downstream buying sentiment improved along with stabilizing prices and spot premiums, and purchasing activities increased when prices were low, with brisk transactions reported. Prices jumped above RMB 60,000/mt after opening in the morning, and traded prices were in the RMB 60,000-60,300/mt range. Prices will feel pressure to move higher following amply supply. However, SMM believes spot premiums will remain in the positive RMB 50-150/mt range in the last two trading days of the week. The stoppage in copper price declines was not only coming from fundamental support, but direction of government policy, and investor confidence. Spot copper prices will experience downward corrections in the short term, but buying interest will improve when prices are at RMB 58,000/mt.
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