Copper prices may pare increase, heavy rare earth prices show sharp increase in Aug

Spot copper in Shanghai was quoted at a backwardation of RMB 100-250/mt over the SHFE current-month copper contract price Wednesday. Traded prices were RMB 53,230-53,300/mt for standard-grade copper, and RMB 53,300-53,450/mt for high-grade copper.

SHANGHAI (SMM): Base metals came under downward pressure given the conflicts between the US and Syria, with most active contracts for copper, aluminum, lead, and zinc on Shanghai Futures Exchange (SHFE) down 0.95%, 0.14%, 0.17%, and 0.66%, respectively on August 28.

Most traded contracts for SHFE gold and silver gained 2.05% and 3.05%, respectively.

Spot copper in Shanghai was quoted at a backwardation of RMB 100-250/mt over the SHFE current-month copper contract price Wednesday. Traded prices were RMB 53,230-53,300/mt for standard-grade copper, and RMB 53,300-53,450/mt for high-grade copper.

Cargo holders were more eager to sell goods by the end of the month, leaving ample supply in spot copper markets. Thus, transactions were limited with quotes for spot copper remaining at high levels and downstream buyers unwilling to purchase.

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SHFE copper prices are expected to pare increase after the 6% growth this month on. Barclay doubted whether copper prices could continue the upward trend, and said recent rallies were mainly caused by short covering against the strong bearishness, while base metals were still under the influence of depressed global economy and softening demand.

Rare earth prices kept rising in July and August, with some heavy rare earth products gained more than 100% so far compared with June when prices hit the lowest level this year. Praseodymium oxide prices (including tax) were RMB 550,000-560,000/mt on August 28, compared with the RMB 355,000/mt in June, a rise of 56%. Neodymium oxide prices increased 44% from June's RMB 250,000/mt to RMB 350,000-370,000/mt on August 28.

Heavy rare earth prices staged sharp growth, prices for fluorescence grade europium oxide were RMB 4,900-5,100/kg (including tax) on August 28, up 52% from June, while prices for fluorescence grade terbium oxide were RMB 4,300-4,500/kg (including tax). Prices for dysprosium oxide were mainly at RMB 2.2-2.4 million/mt, up 109% from June's RMB 1.1 million/mt.

It has been days since the report about the State Reserve Bureau planning stockpile rare earth for reserve. Downstream buyers were cautious, leaving weak demand. Wait-and-see sentiment was pervasive in rare earth market with participants awaiting specific rules about rare earth hoarding.

Source: Shanghai Metals Market (SMM)