SMM Morning Review - 2011/9/30 Copper Market

SHANGHAI, Sept. 30 (SMM) –Germany's parliament Thursday approved a previously announced expansion of the euro-zone's rescue fund, easing some of market concerns and helping the Euro move at high levels, which dampened the US dollar. In this context, LME copper prices gained support at the low-end and stably moved upward, climbing to a high of USD 7,267/mt during trading hours. The US in the evening announced the initial jobless claims fell to a five-month low in the week ending September 24th, but the final reading of Gross Domestic Product (GDP) in the second quarter rallied slightly. Besides, copper miners in Peru went on strike again and threatened copper supply, which helped LME copper prices stabilize above USD 7,000/mt. However, LME copper prices only pared the losses at the tail of trading, and the rising momentum of the US equity markets abated, dragging down LME copper prices. As a result LME copper prices surrendered the slight gains an hours before the settlement, and finally closed at USD 7,147/mt.   

Despite Germany's expansion of the euro-zone's rescue fund, the Euro will mainly keep cautious following a downgrade of New Zealand's credit ratings by Fitch. The US dollar index will narrowly fluctuate below 78 and impose some pressures on LME copper prices. Therefore, LME copper price trends will be cautious, with prices drifting slightly up between USD 7,100-7,250/mt during today's Asian trading hours. In Chinese markets, HSBS will announce the final reading of China's manufacturing PMI data, while Chinese stock markets are unlikely to gain capital inflows on the last trading day before China's National Day holiday, and have risks of falling further. Hence, SHFE copper prices will rally with weaker momentum than LME copper prices, but will probably fall at the tail of trading as both longs and shorts will stay out of the market due to risk aversion sentiment, while SHFE 1112 copper contract prices will move between RMB 52,500 -54,000/mt.