SHANGHAI, Dec. 15 (SMM) –Markets commonly believed the next move of the European Central Bank (ECB) was to increase bond purchases in the region to save European markets after last Friday's European Union (EU) summit, but the ECB later announced it wouldn't, greatly dampening markets. Meanwhile, there were rumors that France's credit ratings would probably suffer a downgrade, while Fitch again cut credit ratings for five large commercial banks in the euro zone area. Besides, the euro zone industrial output for November grew less than market expected, heightening investor worries that the region's debt crisis would hurt global growth and copper demand. In response, market aversion was growing after US stock markets opened, pushing up the US dollar index near 81 and leading the euro to fall below an important support at 1.30. As a result, LME copper prices declined more quickly, down below USD 7,200/mt before finally ending at a low of USD 7,222/mt, a drop of more than 5%, and declines were more than those for the euro and stock prices.
As overnight slumps in crude oil and LME copper prices as well as the euro were generally caused by position closings, and since new short investors are not seen to enter the market, any downside room for copper prices would be limited. Hence, LME copper prices are expected to move between USD 7,130 -7,280/mt during today's Asian trading hours. Chinese stock markets will remain weak and will likely lose support at 2,200 points. SHFE copper prices will probably open down by more than RMB 2,000/mt before falling below RMB 54,000/mt, while SHFE 1202 copper contract prices will fluctuate in the RMB 52,500 -53,800/mt range, tracking weak price trends in LME copper. Spot copper discounts are estimated between negative RMB 250-100/mt.