SMM Morning Review - 2011/11/24 Copper Market

SHANGHAI, Nov. 24 (SMM) –The US and European markets Wednesday continued to absorb China's sluggish HSBC Manufacturing Purchasing Managers' (PMI) Index, while the Euro-zone's manufacturing data announced in the evening was weak and the US job reports and durable goods orders figure were all negative. Meanwhile, Germany failed to sell the full amount of its 10-year bond, fueling investor worries over a spread of the European debt crisis to this country and sending the Euro down to a 7-week low. In response, the US dollar index surge above 79, pushing down LME copper price trends. Besides, transaction volumes on commodity markets were quiescent since the US investors chose to close positions as the Thanksgiving Day and the weekends approach, while the Japanese financial market was closed Wednesday. As a result, LME copper prices couldn't gain support at the low-end and extended Asian trading hours' losses during the US and European trading session, with prices lowering to test USD 7,167/mt in the session. However, LME copper prices pared previous declines at the tail of trading due to technical support, and finally ended at USD 7,280/mt.

Asian markets will continue to absorb negative economic reports on the prior day, so LME copper prices will continue to post weak performance today. Nevertheless, the US dollar index will test 79 several times today after challenging the mark on the previous day, helping cap downside room for LME copper prices. Therefore, LME copper prices are expected to move between USD 7,150-7,400/mt during today's Asian trading hours. Chinese stock markets will try to break the resistance at 2,400 points due to impacts from US equity markets. SHFE copper prices will test RMB 54,000/mt after the opening, while SHFE 1202 copper contract prices will fluctuate in the RMB 53,000-54,900/mt range. In the spot market, any increase in copper premiums will be limited should the SHFE/LME copper price ratio improve, and combined with a drag from imported copper supply, spot copper premiums will be between positive RMB 600-800/mt versus SHFE 1112 copper contracts.