SMM Morning Review - 2011/9/27 Copper Market

SHANGHAI, Sept. 27 (SMM) –LME copper prices Monday fell deeply into a bear market and continued to set a new yearly low of USD 68,000/mt, a drop of 32% compared with the above USD 10,000/mt record reached in February 2011, due to the escalating European debt crisis, a surge in US dollar index at 78.863, as well as investors' worries that a potential slowdown in global growth would cut metals demand. Some buying activities entered into the market as copper prices tumbled, helping LME copper prices gradually rally. Coupled with the news during European and American trading hours that the European Union (EU) was planning new schemes for Europe's debt issues, market sentiment improved slightly, causing US equity markets to rise by 2%. The Euro rebounded strongly, while the US dollar closed lower, which helped LME copper prices reverse earlier declines. Later, the US announced both new home sales in August and September Dallas Fed Manufacturing Activity Index slid, but seemed to have a limited impact on LME copper price trends. LME copper prices finally ended the day at USD 7,288/mt, returning near the level reached in earlier Asian trading hours.  
  
Despite the pessimistic macro-economic environment, copper prices need a round of corrections following significant declines. Besides, comforting news in the US and the Euro-zone area came in this morning. Therefore, LME copper prices are expected to move between USD 7,250-7,400/mt during today's Asian trading hours. Chinese stock markets will move above 2,400 points due to a lift by rising US equity markets, but cash flow pressures at the month's end will keep the movement weak. SHFE copper prices will follow LME copper prices to rebound, while SHFE 1112 copper contract prices will fluctuate in the RMB 54,700-56,000/mt band.