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SMM Base Metals Market Daily Review (2014-12-8)

Release time:2014-12-10

Dec 09, 2014 05:29 GMT   Source:SMM

 

SHANGHAI, Dec. 9 (SMM) –    Copper  Copper for February delivery on the Shanghai Futures Exchange, the most active contract, started at RMB 46,210/mt in last Friday’s night session and then dipped to RMB 45,860/mt. The price of the SHFE 1502 copper contract ended down RMB 150/mt at RMB 45,930/mt. During the night session, trading volumes for the most active contract decreased to some 130,000 lots, but positions added 798 lots.   SHFE copper leveled out Monday to hover narrowly around RMB 46,050/mt and advanced to RMB 46,200/mt in the afternoon trading session, boosted by a 3% rise in the Shanghai Composite Index. The price of the red metal, however, retreated again at the tail of the trading to close down RMB 170/mt, or 0.37%, at RMB 45,910/mt. Trading volumes for the SHFE 1502 copper contract shrank 132,000 lots, while positions dropped 22,048 lots. Spot copper in Shanghai was quoted Monday at a RMB 70-140/mt premium to the SHFE 1412 copper contract. Standard- and high-quality copper sold for RMB 46,870 -46,930/mt and RMB 46,900-46,980/mt, respectively.   As SHFE copper hovered in a narrow range, cargo holders sold steadily. However, speculative traders and downstream producers both stayed out of the market, expecting spot copper premiums to narrow before the delivery of the SHFE 1412 copper contract.   Spot copper was quoted at a RMB 50-130/mt premium in the afternoon trading, with traded prices close to those in the morning trading. Copper supply remained sufficient.   SMM’s latest survey shows 20% of market players expect copper prices to rise this week, with LME copper climbing above USD 6,500/mt and SHFE copper standing above RMB 46,500/mt, citing three factors.   First, the strong US nonfarm payrolls allowed the Dow to hover near a high of 18,000, boosting commodity market. Second, the much-concerned Chinese Central Economic Work Conference will be held December 9, and market players hope new pro-growth policies will be rolled out at the conference. Third, some downstream buyers plan to stockpile sufficient copper for production in the rest of the year before the last trading day of the SHFE 1412 copper contract, so copper consumption is expected to improve. Finally, the LME cash-to-three-month backwardation rose to USD 71/mt, a reflection of tightening supply, which is also expected to bolster copper prices.    70% of market players hold that LME copper will stay at USD 6,400-6,500/mt, and SHFE copper will remain in the RMB 45,600-46,400/mt range.   Technical indicators pointed upwards and also showed resistance at higher levels. Besides, last week’s rebound in copper market was mainly powered by profit-taking of shorts rather than buying activities. As such, copper prices may lose steam to rise further this week.   The remaining 10% are bearish, citing the high US dollar index and downside risk to crude oil and gold prices. Moreover, the soaring Chinese stocks are sucking money from futures market, which will also bode ill for copper. In addition, China’s imports of copper semis and unwrought copper were reported up in November, presaging an inflow of imported copper to China’s local markets. The resultant growth in supply may weigh down copper prices.   Aluminum       Last Friday night, SHFE 1502 aluminum contract climbed to RMB 13,470/mt after starting at RMB 13,450/mt. But the contract retreated to RMB 13,385/mt later before finishing at RMB 13,395/mt. Trading volumes and positions totaled 19,092 lots and 127,000 lots, respectively.    On Monday, the most active contract drifted lower on depressed Chinese economic data. China’s exports rose 4.7% YoY in November, missing forecasts. The country’s imports declined a surprising 6.7% YoY. Both figures kindled worries that China may not be able to fulfill 7.5% GDP growth target for thi......