SMM Morning Review - 2011/9/16 Copper Market

SHANGHAI, Sept. 16 (SMM) –The ECB Thursday announced a coordinated push between the US Federal Reserve (Fed), Swiss National Bank (SNB), Bank of Japan (BOJ) and the Bank of England (BOE) to inject dollar liquidity into European banks in a bid to prevent difficult financing problems from spreading to banking system and affecting business activities. Investors believed this move would help rebuild global confidence and boost industrial commodity expenditure as well. Market worries over the European debt crisis seemed to alleviate, causing futures and stock markets to rebound from sharp declines, with US equity markets closing higher. The euro surged against the US dollar, which closed significantly lower, touching a low of 76. LME copper prices rebounded from below USD 8,700/mt. However, the US later announced the US initial jobless claims last week unexpectedly increased to a high since June, and that the NY Empire State Manufacturing Index also contracted in September, while only industrial production rose 0.2% in August. In this context, investors' optimistic sentiment was dampened, realizing economic uncertainty was growing. As a result, they still chose to reduce position holdings, which led LME copper prices to lose momentum after climbing to USD 8,785/mt. Finally, LME copper prices closed at USD 8,746/mt, up USD 127/mt compared with the previous trading day.  
 
Asian markets Friday will continue to absorb the positive news of eased Europe's debt issues. Comex copper prices already rallied in Friday's morning business, and LME copper prices also tended to move upward. But the US dollar index is unlikely to fall further following Thursday's significant declines, with expectations of struggling around the 10-day moving average, which will weigh down LME copper prices. Hence, LME copper prices are expected to move between USD 8,720-8,820/mt during Friday's Asian trading hours. The Shanghai Composite Index will continue to test 2,500 points. SHFE copper price trends will be weaker than those for LME copper, and SHFE 1111 copper contract prices will fluctuate in the RMB 65,200-66,200/mt range.