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SMM Morning Review - 2011/9/23 Copper Market
Sep 23,2011 09:40CST
price review forecast
LME copper prices will move between USD 7,640-7,740/mt during today's Asian trading hours, while SHFE 1112 copper contract prices will fluctuate between RMB 57,600-58,500/mt.

SHANGHAI, Sept. 23 (SMM) –Markets Thursday continued to absorb the Federal Reserve's (Fed) warning of “significant downside risks to the economic outlook”, causing markets to slump further. Meanwhile, a set of PMI reports announced in China and Europe all contracted, while the Consumer Confidence Index in the Euro-zone area fell to -18.9 in September, worse than the expected and the previous data. Besides, the US economic results were also weak, including the initial jobless claims last week and index of leading economic indicators for August, increasing demand concerns over base metals and other raw materials, which caused commodity markets to fall further. As a result, investors cut position holdings of riskier assets such as copper and bought the US dollar for risk aversion, helping the US dollar index climb to a high of 78.798. In response, LME copper prices tumbled all the way from near USD 8,230/mt, losing several price marks and finally closing at a low of USD 7,620/mt, registering a daily decline of 8.6%, and the largest intraday drop since October 30th, 2008. Copper slumped into a bear market, with low sentiment.

Although worries about the European debt crisis remain, some investors will adjust position holdings in the Euro-zone area today due to the approach of weekends. Hence, the euro will weakly fluctuate today. The US dollar index, however, will move around a high level of 78, which will weigh on LME copper prices. Crude oil prices and Comex copper prices rebounded this morning, which will give some support for the extremely weak copper market. Therefore, LME copper prices are expected to move between USD 7,640-7,740/mt during today's Asian trading hours. Negatively affected by a more than 3% slump in US equity markets on the previous trading day, Chinese stock markets will test the support at 2,400 points after a low open. SHFE copper prices will open significantly lower at around RMB 58,000/mt, and then mainly fluctuate, while SHFE 1112 copper contract prices will fluctuate in the RMB 57,600-58,500/mt range. 


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