SHANGHAI, Nov. 22 (SMM) –The US deficit problems were again brought into market attention on Monday, while pessimistic prospects for heavy debt loads in Europe and Chinese leader's pessimistic comments on global economy added more pressures on copper markets. Since the US congressional "super committee" hadn't made progress in talks over taxes and spending to cut the deficit since its establishment three months ago, investors became more worried about the US economic growth prospects and skeptical about an agreement on deficit reduction as a Wednesday deadline nears. In this context, LME copper prices kept fluctuating in Asian trading hours while trading volumes were very limited. However, a set of high risky assets suffered wild sell-offs during the US and European trading hours, leading stock markets in Europe and the US to slump by more than 2% and the US dollar index to close strongly higher due to risk aversion. As a result, LME copper prices slipped all the way after the opening in the US and European trading session, losing USD 7,300/mt in the session and falling to USD 7,252/mt. At the tail of trading, due to announcement of the US bettter exsisting home sales, LME copper prices pared previous losses and finally closed at USD 7,306/mt.
A series of negative news pile up. Investors are generally pessimistic towards the result of the US deficit plan tonight, and Moody's already placed a negative outlook on the US credit rating, despite the confirmation of its AAA rating, which will exert pressures on copper markets. However, the US dollar is expected to make corrections following significant gains on the prior day, easing pressures on copper prices. Therefore, LME copper prices will move between USD 7,230-7,430/mt during today's Asian trading hours, with limited downside room. Chinese stock markets will likely lose 2,400 points due to a slump in US equity markets overnight. SHFE copper prices will follow LME copper prices to open down and then test support at RMB 53,000/mt, while SHFE 1202 copper contract prices will fluctuate in the RMB 53,000 -55,500/mt range.