Latest Update in the China Copper Market

Shanghai base metals set for a mixed start on Tuesday morning. China on Tuesday kept the one-year loan prime rate (LPR) unchanged at 3.85% and five-year LPR at 4.65%. 

The dollar slumped to a six-week low against major peers on Monday, with Treasury yields near their lowest in five weeks, after the U.S. Federal Reserve reiterated its view that any spike in inflation was likely to be temporary.

SHFE nonferrous metals rose for the most part on Monday April 19, mirroring trading in global markets.

The following table shows the ferrous and nonferrous metals movement on the SHFE and DCE on April 19, 2021

Quotes were mixed in Shanghai due to delivery last week. As the price spread between the SHFE front-month and next-month contract expanded, spot premiums over the SHFE front-month copper contract reached around 100 yuan/mt at the beginning of the week. Spot discounts over the SHFE next-month contract stood at around 100 yuan/mt with the approach of delivery. However, sellers and buyers were at odds amid weak trades under long-term contracts ahead of delivery. Spot quotes returned to big discounts on Friday amid significant volatility in SHFE copper prices after delivery and significant inventory increase in Shanghai. Most of the trades occurred among traders.

Copper prices fell before rising last week, dipping to 65,700 yuan/mt early in the week. As the US dollar index fell to 91.5, copper prices exceeded 69,000 yuan/mt.

Three-month LME copper closed 1.37% lower at $9,182/mt last Friday, while the most-traded SHFE 2106 copper contract shed 0.6% to end at 68,130 yuan/mt last Friday night.

The dollar fell to a four-week low against a basket of currencies on Friday, still smarting from a sharp drop in U.S. Treasury yields the previous session, and as investors increasingly bought into the Federal Reserve’s insistence it would keep an accommodative policy stance for a while longer.