SMM Morning Review - 2011/10/13 Copper Market

SHANGHAI, Oct. 13 (SMM) –The European Union (EU) Wednesday laid out a plan to resolve the Euro-zone's debt crisis, including shoring up the region's rattled financial institutions, proposing continued emergency lending to Greece as well as an accelerated timetable for deploying the euro-zone rescue fund, which eased market worries over Europe's debt woes and greatly lifted the Euro. Moreover, the September Fed Minutes announced later showed that some policymakers saw considerable uncertainty surrounding the US economic growth and hoped to retain QE3 option, sending the US dollar down to 76.796. In response, LME copper prices kept rising momentum, breaking the resistance at USD 7,500/mt and finally ending at USD 7,491/mt, a surge of more than USD 200/mt. However, as market trading volumes were still much lower than the average 30 days' trading volumes, and investors were also not seen to significantly keep up with the rising copper prices, market caution remained unchanged.

The US dollar index will extend losses today due to expectations about loose monetary policy, and alleviation in the European debt crisis will also comfort market confidence, both of which will support LME copper prices. Nevertheless, LME copper prices are still facing more selling pressures at the highs, in addition to great resistance at USD 7,500/mt. Therefore, LME copper prices will move at high levels of between USD 7,350-7,550/mt during today's Asian trading hours, with limited continuous rebounding room. In Chinese markets, China will announce its September trade data, and Chinese stock markets will continue to rise due to the government's new policies, which will help domestic copper prices to make corrections. Hence, SHFE copper prices will test RMB 56,000/mt, while SHFE 1112 copper contract prices will fluctuate in the RMB 54,500 -56,500/mt range.