SMM Copper Market Daily Review (2015-4-27)

SHANGHAI, Apr. 28 (SMM) – The SHFE 1507 copper contract prices tested RMB 43,800/mt on Monday and hovered at RMB 43,700/mt before ending at RMB 43,730/mt, up RMB 580/mt. Trading volumes of SHFE 1507 copper contract increased 154,000 lots, while positions grew 13,602. Total positions in SHFE copper declined 13,828. SHFE copper has found solid support after standing above major moving averages.

Spot premiums in the Shanghai copper market narrowed to RMB 130-180/mt Monday morning. Prices are RMB 43,980-44,180/mt for standard-quality copper and RMB 44,000-44,200/mt for high-quality copper.

Some traders sourced goods at lows, but speculators sold actively after SHFE copper climbed RMB 200/mt, narrowing spot premiums. Supply of standard-quality copper remained tight. Downstream buyers rarely purchased. Spot premiums continued to fall in the afternoon to RMB 100-150/mt.

SMM’s most recent survey shows 55% of industry insiders expect LME copper will jump above USD 6,100/mt and SHFE copper will stand above RMB 44,000/mt this week, citing relatively weak US dollar and strong US shares, as well as positive technical indicators. China’s stocks climbed above 4,500 on Monday, cheering investors, which plus dip-buying in copper market, will bode well for copper prices.

40% of market players see LME copper to stay at USD 5,980-6,080/mt and SHFE copper to remain in RMB 43,200-44,000/mt. These players based their opinions on mixed economic reports and tight month-end cash which will constrain trading.

The remaining 5% are bearish that LME copper prices will fall to USD 5,950/mt and SHFE copper should drop to RMB 43,000/mt. These players see selling pressures above USD 6,150/mt and RMB 44,000/mt. As for fundamentals, although SHFE copper inventories fell by more than 20,000 mt last week, the higher SHFE/LME copper price ratio is expected to result in an influx of imported copper, preventing spot premiums from growing.