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SMM Morning Review - 2011/11/18 Copper Market
Nov 18,2011 09:38CST
smm insight
LME copper prices will move between USD 7,400-7,600/mt during today's Asian trading hours, while SHFE 1202 copper contract prices will fluctuate in the RMB 54,700-56,000/mt range.

SHANGHAI, Nov. 18 (SMM) –Market focus was still on Europe overnight, and data revealed Spain's borrowing costs already soared to a euro-era record near 7%. Besides, Fitch later warned that Europe's stressed financial system could put about USD 50 billion of exposure at risk for the largest US banks. Against this backdrop, investor worries that a spread of the Euro-zone debt crisis could affect the US and even global economy and industry sector were growing, which caused the Euro to dive and US equity markets to slump for a second straight day, despite positive economic reports from the US. Crude oil prices plummeted by 3%, and LME copper prices fell and deteriorated the declines at the tail of trading due to an increase in trading volumes. Finally, LME copper prices closed at a recent low of USD 7,470/mt, a drop of more than 3.5%, and the biggest daily drop in three weeks.

Recent LME copper prices will continue to be weighed down following last night's significant declines. Asian copper markets continue to absorb the negative news overnight, and even if Spain's borrowing costs are less than 7%, payment of the country's debts will still be difficult, so LME copper prices will not be able to easily break the resistance at the upward moving averages. However, positive data from the US will help support the low-end LME copper prices, including last week's initial jobless claims which fell to a 7-month low and a strong rebound in permits for future home construction for October. Therefore, LME copper prices will rally after initially falling down, with prices expected between USD 7,400-7,600/mt during today's Asian trading hours. Due to a slump in US equity markets overnight, Chinese stock markets will open down, but will then increase after confirming 2,400 points. SHFE copper prices will open significantly down, and meet profit-taking at near RMB 55,000/mt, while SHFE 1202 copper contract prices will fluctuate in the RMB 54,700-56,000/mt range.  


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