SHANGHAI, Aug. 15 (SMM) –According to financial data released by China's Central Bank on August 12th, the balance of broad money (M2) in July was down 1.2% MoM and 2.9% YoY, and RMB loans increased by RMB 492.6 in July, up RMB 25.2 year-on-year. Given weaker-than-expected financial results in July, there is little possibility of interest rate increases or Reserve Requirement Ratio (RRR) hikes this month.
SMM believes if China's Central Bank doesn't increase interest rates or RRR in August as market expected, the move will support recent weak copper prices, which will then not likely fall below RMB 64,000/mt. Despite no impacts from China's news-side, there are no signs of improvement in the US economy and its monetary policies remain uncertain. Coupled with a possible spread of the European debt crisis, investors are cautious towards trading, and risk appetites will not likely increase.
SMM believes RMB 70,000/mt is the important resistance for SHFE copper prices.