SMM Morning Review - 2011/11/3 Copper Market

SHANGHAI, Nov. 3 (SMM) –Overnight, as the European debt crisis severely affected new factory orders, the manufacturing sector in the Euro-zone area contracted more than the market expected, causing investors on the US and European copper markets to slow down their purchases during earlier trading session. Later, since some market players previously expected the US Federal Reserve (Fed) would indicate to ease monetary policies, namely QE3 measures, investors became more cautious towards market operations after the Fed announced to keep the existing monetary policies unchanged and offered a relatively brighter economic outlook. In the evening, the US released the better-than-expected ADP employment data for the private sector in October, but investors didn't blindly enter the market before they saw any progress on Greece's debt problems. As a result, LME copper prices fluctuated between USD 7,900-8,000/mt during Wednesday's US and European trading hours, with prices finally closing at USD 7,918/mt, and ending the losing streak for two consecutive days due to Asian trading hours' gains.

Markets worries over the European debt woes are persistent, and G20 officials said they have frozen all the bailout fund for Greece and will remain so till Greece holds a public vote. China also said it can't make a promise to make investment for the expanded EFSF, while the poor PMI data in the Euro-zone area continues to dampen investor confidence. Therefore, the Euro will post weak performance today, and the US dollar index will test around the 30-day moving average, which will exert great pressures on copper price trends. Market players will keep wary of trading before any result coming out of the G20 meeting, which has already been reflected by a drop in crude oil and Comex copper prices this morning. But an improvement in Asian stock markets will provide some support for LME copper prices, which will move between USD 7,770-8,020/mt during today's Asian trading hours. Chinese stock markets will continue to move upward after increasing above 2,500 points, which will boost SHFE copper prices. Hence, long and short investors will struggle at RMB 58,400/mt, while SHFE 1201 copper contract prices will fluctuate in the RMB 57,500-59,000/mt range.