SMM Morning Review - 2011/9/26 Copper Market

SHANGHAI, Sept. 26 (SMM) –The European debt crisis worsened last Friday, and dimmed US economic outlook and an economic slowdown in China triggered turmoil in global financial markets, which caused LME copper prices to continuously set a new yearly low of USD 7,115/mt in their early trading sessions and led market panic sentiment spread. However, large-scale buying activities were stimulated since the market was considered oversold. Coupled with support from copper fundamentals, LME copper prices narrowed the previous declines, with prices closing at USD 7,288/mt. Positions were significantly up by more than 10,000 lots. From the International Monetary Fund (IMF) annual meeting and the meeting of G20 finance ministers last weekend, traders would strongly react to any related opinions about current crisis. Therefore, SMM believes that any news in the upcoming few days will rattle market sentiment, and that copper prices will experience volatilities.      

There was news this morning German and French leaders last weekend were drafting plans for the Euro-zone crisis, showing stable mechanism in this region will come in ahead of time in 2012 instead of 2013, lifting the euro after the opening, which will help the US dollar index move downward. Comex copper prices and crude oil prices rebounded. However, financing abilities of European banks are falling, so the euro will mainly fluctuate today. A slight down in the US dollar index will support low-end LME copper prices, which are expected between USD 7,250-7,390/mt during today's Asian trading hours. Chinese stock markets last Friday closed slightly higher due to impacts of rising US equity markets, and will have limited downward room today. SHFE copper prices today will continue to open significantly down after sliding by their daily limit on Friday, but oversold levels will help prices stablize, while SHFE 1112 copper contract prices will move in the RMB 54,400-55,600mt range.