Author：Site  Source：Original Site  Click to rate：1413  Post time：2014-04-15

Tags: SHFE base metals,aluminium circle

SHANGHAI, Apr. 15 (SMM) – Copper SHFE copper prices challenged resistance at the RMB 47,000/mt mark after starting last Friday’s night session at RMB 46,600/mt, boosted by a sharp rally in LME copper prices. The red metal, however, tested a low of RMB 46,390/mt subsequently due to profit-taking, and finished up RMB 100/mt at RMB 46,580/mt. During the night session, traded volumes rose to some 320,000 lots, while positions decreased by 1,306 lots. Positions for the SHFE 1408 copper contract instead surged by 10,740 lots, with significantly brisk trading activity. On Monday, the short squeeze for the SHFE current-month copper contract gave a boost to SHFE copper contracts, with the most active SHFE copper contract hitting a high of RMB 46,950/mt. The contract prices later fell back due to technical resistance, and closed Monday up RMB 300/mt, or 0.65%, at RMB 46,780/mt. Traded volumes gained by 147,000 lots, while positions shed by 17,388 lots. Positions for the SHFE 1408 copper contract expanded by 17,080 lots, and positions for the SHFE current-month copper contract continued to hover at around 10,000 lots after decreasing by 7,520 lots. The copper warrant report released by the Shanghai Futures Exchange suggests that 5,000 lots of positions are expected to be liquidated in the last trading day for the SHFE 1404 copper contract. This will further push up the SHFE current-month copper contract price and cause sell-offs in SHFE distant-month copper contracts. The SHFE current-month copper contract will continue to outperform the most active SHFE copper contract, with the price gap between these two contracts expected to widen. In the Shanghai physical market, copper was offered Monday at premiums of RMB 150-600/mt over the SHFE current-month copper contract price. Traded prices were RMB 48,300-48,450/mt for standard-quality copper and RMB 48,400-48,600/mt for high-quality copper. A sharp rebound in the SHFE current-month copper contract price drove the price gap between the SHFE 1404 copper contract and the SHFE 1405 copper contract to as high as RMB 600/mt. As a result, physical premiums for high-quality copper were quoted at RMB 500-600/mt, and those for standard-quality copper were RMB 450-500/mt. The high premiums restrained trading activity in the market. SHFE copper prices rose further by around RMB 500/mt by the midday, while the price gap between the SHFE 1404 copper contract and the SHFE 1405 copper contract also expanded to RMB 900/mt. Cargo holders ramped up moving goods to generate cash before the delivery date, which inflated copper supply and in turn significantly dragged down physical premiums. Premiums were quoted mostly between RMB 150-350/mt, but transactions were modest and largely were conducted among middlemen. Downstream producers barely entered the market believing that prices were too high. Short positions for the SHFE current-month copper contract should continue to see liquidations ahead of the delivery due Tuesday since SHFE copper prices now hover at high levels. Although SHFE copper prices pulled back due to the lack of upward impetus during the afternoon trading hours, the price gap between SHFE 1404 and 1405 copper contracts still hovered around RMB 800/mt. Cargo holders thus continued to have high selling interest to generate cash. Physical premiums were initially offered at RMB 150-280/mt, but narrowed to RMB 0-90/mt at the tail of the trading, with traded prices between RMB 48,100-48,350/mt. Some aggressive speculators entered the market to purchase copper and sell futures contracts as physical premiums swung by over RMB 500/mt. Trading activity, however, was merely modest with sufficient supply in the market. SMM’s latest survey revealed that 59% of market players expected copper prices remain range-bound this week, with LME copper prices consolidating at USD 6,600-6,700/mt, and SHFE most active copper contract prices between RMB 46,200-47,000/mt. These players based their opinions partly on the intensifying Russian-Ukraine tension with gunfire reported. On the macroeconomic front, the US economic indicators proved positive, but financial reports from large companies turned out disappointing, sending the US stock prices down. Subdued stock market may prevent copper prices from swinging sharply. The most recent CFTC report indicated a decline in net short positions in copper to 18,501 lots for the week ending April 8. Technically, although LME copper prices held above the 5-day moving average, selling pressure remained strong at USD 6,700/mt. With respect to China’s markets, Shanghai Composite Index rebounded after the China Securities Regulatory Commission approved to pilot cross-border investment in Shanghai and Hong Kong’s stock trading. Chinese Premier Li Keqiang said no massive stimulus is in the offing, but market believes the Chinese government will not allow its economy to decline further, and thus expects the government to “fine tune” its monetary policies.

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