Shanghai copper futures saw a slight increase. The June contract, the main contract, closed at 43,530 yuan/ton, up 250 yuan or 0.58%. At 15:00 on the same day, London's March copper was quoted at 6,042 USD/ton. The ratio between Shanghai and London was 7.20, lower than the previous trading day's 7.21, indicating that the increase in Shanghai copper futures was smaller than that in the London market. A total of 426,998 contracts were traded, with positions increasing by 282 to 819,646 contracts. The main contract saw 235,236 contracts traded, with positions decreasing by 3,328 to 375,940 contracts. The latest quote for #1 copper on the Shanghai Nonferrous Metals Network was 42,430-42,550 yuan/ton, with premiums (discounts) ranging from 140 yuan to (discount) 60 yuan.
Market Analysis
Long-term: Broke below long-term support, trending downwards with volatility.
Mid-term: Rebounded from the bottom.
Short-term: Narrow range volatility.
In terms of spot markets, today's Shanghai electrolytic copper spot prices were at a premium of 60-100 yuan/ton to the current month's futures contract. Flat copper was traded at 43,550-43,610 yuan/ton, while premium copper was traded at 43,570-43,650 yuan/ton. Shanghai copper futures faced resistance during its upswing, prompting holders to withhold goods in the morning, awaiting market gains. Low-priced goods were quickly absorbed by speculators after being released. Flat copper was the first to increase premiums for shipments, followed by higher-quality copper being pushed up for sales. There continued to be no price difference between brands. However, as higher-quality copper prices rose to nearly 100 yuan, market trading activity significantly decreased, resuming a stalemate. Holders began to pay attention to changes in the spread between different months before delivery, and speculators increased their short-term market entries. Downstream buyers made purchases based on demand, with overall trading remaining lukewarm. In terms of industry news, according to foreign reports on March 2, Chile's Mining Minister Aurora Williams stated on Monday that the Chilean government maintained its 2015 copper production estimate at 6 million tons, an increase of 5% from 2014 levels. She said that the decline in international oil prices would help high-cost producers maintain output growth. She also indicated that the Chilean government would take measures to assist small miners in dealing with high production costs. In Lusaka on February 23, Zambian President Edgar Lungu stated on Facebook that if the Lumwana copper mine in the country were to be idled by Barrick Gold Corporation, the Zambian government might need to consider finding a new strategic partner for ZCCM-IH, the state-owned company that is another owner of the mine. According to a report from Tokyo on January 20, the Japan Electric Wire and Cable Makers' Association reported that Japan's copper cable shipments (including sales and exports) in December declined by 2.9% year-on-year to 60,000 tons. On the macroeconomic front, the People's Bank of China decided to lower the benchmark interest rates for loans and deposits of financial institutions starting from March 1, 2015. The one-year benchmark loan rate was reduced by 0.25 percentage points to 5.35%, and the one-year benchmark deposit rate was reduced by 0.25 percentage points to 2.5%. At the same time, in line with the promotion of interest rate liberalization reforms, the upper limit of the floating range for deposit rates of financial institutions was adjusted from 1.2 times the benchmark deposit rate to 1.3 times. Corresponding adjustments were made to other benchmark deposit and loan rates, as well as personal housing provident fund deposit and loan rates. On Monday, data released by the Institute for Supply Management (ISM) showed that the U.S. ISM Manufacturing PMI for February was 52.9, lower than the expected 53, marking the fourth consecutive monthly decline and a 13-month low. The expansion pace of the U.S. manufacturing sector slowed again in February compared to January.
Yesterday, Shanghai copper futures experienced narrow range volatility. Although fundamental supply remains loose and the U.S. dollar has stabilized, short-term factors such as drought in Chile, increased willingness of downstream buyers to stock up after the holiday, the implementation of the "Belt and Road" policy, and the central bank's reduction of the down payment ratio for second homes provide certain support for copper prices. Overall, we believe that Shanghai copper futures will continue to rise in the short term. Therefore, we recommend holding long positions in the main June 2015 contract, with a stop loss at 42,900 yuan.
CN