SHANGHAI, Dec. 9 (SMM) –The European Central Bank's (ECB) move to cut the benchmark interest rate overnight failed to boost markets, as the ECB President Mario Draghi said ECB's current plan of bond purchases is not permanent and without restrictions and didn't make any promise to increase purchases as investors expected. Mario Draghi also gave expectations that the euro zone's economic growth will slip into recession in 2012, which greatly dampened market risk appetites and caused the US dollar index to climb higher due to safe-havens. As a result, LME copper prices fell rapidly by more than USD 100/mt along with the US and European stock markets, down as low as USD 7,661/mt in the session. Finally, LME copper prices ended the day at USD 7,706/mt, a down close for the third consecutive day, ignoring the positive employment data from the US.
Market focus will shift to the release of China's economic data, which will have a limited impact on copper price increases since markets have already expected a continuous drop in the November CPI. However, markets didn't absorb the ECB's action to cut the benchmark interest rate and US economic data, while the US dollar index will also need to make slight corrections following overnight rises, which will support the low-end copper prices. Hence, LME copper prices are expected to move between USD 7,680 -7,800/mt during today's Asian trading hours. Chinese stock markets will test support at 2,300 points owing to slumps in US stock markets. Therefore, SHFE copper prices will open lower and are unlikely to move higher, while SHFE 1202 copper contract prices will fluctuate in the RMB 800 -57,600/mt. Spot copper discounts will fall to negative RMB 100-0/mt due to a low open in SHFE copper prices, but weak consumption will not allow copper premiums.