SHANGHAI, Oct. 20 (SMM) –The US and European markets Wednesday continued to absorb some negative news, including the downgrade of Spain's sovereign credit ratings and China's Ministry of Commerce's (MOC) pessimistic expectations about the country's future exports, which increased market worries over a drop in China's copper demand. Coupled with low market sentiment and a down close in US equity markets, LME copper prices moved towards a lower level to look for support, falling below USD 7,200/mt. It seemed that the positive economic data announced later by the US couldn't ease LME copper prices since investor confidence was already shaken, and thus LME copper prices failed to gain buying support at the lows. Finally, LME copper prices closed at a recent low of USD 7,180/mt, with the daily decline exceeding 3.5%.
Market pessimistic sentiment is unlikely to recover today, and panic sentiment will force LME copper prices to lower further to look for support. However, Greece this morning initially passed the austerity plan of cutting salaries and increasing taxes, showing Greece will not allow the country's situation to worsen any further, at least temporarily, which will probably help the Euro slow its declines. Comex copper prices rebounded slightly this morning, and news of strikes at some copper mines will be also positive for LME copper prices. Therefore, LME copper prices are expected to move between USD 7,050 -7,200/mt during today's Asian trading hours, with limited upside room. Chinese stock markets will remain weak today, and will drag down SHFE copper prices. Hence, SHFE copper prices will open lower, and some short investor will report profit-taking. However, SHFE copper prices will be more resilient than LME copper prices, while SHFE 1201 copper contract prices will fluctuate in the RMB 52,200 -53,500/mt range.