SMM Morning Review - 2011/8/10 Copper Market

SHANGHAI, Aug. 10 (SMM) –The Fed overnight said in its statement that the US will keep low interest rates till 2013, reassuring market investors and reducing their risk aversion sentiment. In this context, US equity markets rallied stably, while the US dollar index weakened. Meanwhile, China's National Bureau of Statistics announced the country's refined copper output during July increased by 18% YoY to 478 kt. After experiencing panic sell-off for almost a week, buying interest at lows helped LME copper prices rebound from an earlier 8-month low. LME copper prices basically remained stable during European and American trading hours, with prices finally closing at USD 8,757/mt, slightly down USD 9/mt. It's worth noticing that a lot of market investors are still staying out of markets based on position and trading volumes, as they will make further confirmation on the copper rally.

During Wednesday's Asian trading hours, Asian markets will continue to absorb the Fed's low interest rate decision, and the US dollar index will remain weak. Although the European Central Bank has begun to buy Italian bonds, market players are still not confident over European debt crisis. In this context, the Euro will mainly fluctuate, and currency markets will slightly support LME copper prices. Due to pressures at the 5-day moving average and since copper prices on the Comex moved lower after a high open in the morning business, LME copper prices will fluctuate widely after a high open, with prices expected between USD 8,900-9,050/mt. In domestic market, China's stock markets will fluctuate after opening high due to impacts from US equity markets. SHFE three-month copper contract prices will track LME copper price trends after opening significantly higher, and SHFE 1110 copper contract prices will move between RMB 67,000-68,500/mt.