SHANGHAI, Dec. 13 (SMM) –The US and European markets were heavily weighed Monday. On one hand, despite positive import data for China's unwrought copper, the RMB:USD exchange rate reached daily loss-limits for nine straight days, and the Shanghai Composite Index lost 2,300 points, spurring market worries that Chinese markets including stock and futures markets and even the real estate market would probably experience a new round of capital reorganization, and dragging down international markets. On the other hand, the Standard & Poor's (S&P) said it could possibly downgrade the credit ratings for European economies, while Moody's said it would still likely issue assessments on European countries in early 2012, triggering market fears that credit ratings for major European countries could be downgraded in the coming months. Combined with an increase in yields on Italian and Spanish bonds overnight, large quantities of capitals fled from European stock markets, which posted the largest one-day loss in three weeks, while euro also fell to a two-month low. As a result, US equity markets closed more than 1% lower, and LME copper prices extended Asian trading hours' losses, with prices falling to USD 7,565/mt after losing USD 7,600/mt and finally ending at USD 7,612/mt, a slump of more than USD 200/mt. LME copper prices are likely to lose support at the 20-day moving average.
Markets will continued to be weighed due to bearish sentiment, but the US dollar is estimated to make corrections following excessive increases overnight, which will help cap LME copper prices declines. Hence, LME copper prices will move between USD 7,550 -7,680/mt during today's Asian trading hours. Chinese domestic markets will remain weak, especially against the backdrop that the Shanghai Composite Index lost 2,300 points on the prior day and US equity markets plummeted, becoming one of the factors pushing down SHFE copper price trends. SHFE copper prices will open lower and extend declines during the whole trading day, while SHFE 1202 copper contract prices will fluctuate in the RMB 55,500 -56,800/mt range. In this context, spot copper discounts will not expand further, but sluggish consumption and increases in imported copper will make significant copper premiums impossible, with copper offers predicted between discounts of negative RMB 150/mt and premiums of positive RMB 20/mt.