SHANGHAI, Dec. 22 (SMM) –There were relatively fewer macroeconomic news and economic data overnight. The US and European markets absorbed the news that the European Central Bank (ECB) successfully sod emergency three-year loans in earlier trading session. The ECB's move is to provide three-year loans with interest rate of 1% to shore up European banks and prevent the European sovereign debt crisis from hurting the Europe's credit system, which boosted the euro and helped commodity markets to move higher. As a result, LME copper prices broke out resistance at the USD 7,500/mt level, climbing as high as USD 7,573/mt. However, as market aversion grew before the Christmas holiday, LME copper prices lost momentum to climb up further. Combined with instabilities in risk appetites before the year-end, the US dollar trended higher for a safe-haven. Consequently, LME copper prices pared daily gains and finally settled at USD 7,461/mt. Nevertheless, it's worth noticing that the proportion of canceled warrants to LME copper inventories rose sharply to 10% Wednesday from the 8% level seen on the prior day, which will likely support LME copper prices over the near term.
Market activity will continue to keep light today, and LME copper prices tend to be greatly affected by macroeconomic news. Europe's debt crisis persists, and the US dollar is likely to move higher, bringing pressures to LME copper prices. Together with increasing pressures at the daily moving average, LME copper prices will post weak performance. However, copper import data from China Customs will support LME copper prices somehow. As such, SMM believes that LME copper prices will move between USD 7,350 -7,520/mt during today's Asian trading hours. Chinese stock markets will fall below 2,200 points, and the financing of Ping An Life Insurance Company of China is negative for daily trends of Chinese stock markets, dragging down SHFE copper prices, which will mainly fluctuate after a high open. SHFE 1203 copper contract prices will fluctuate in the RMB 54,200- 55,200/mt range. Spot copper offers are estimated between discounts of negative RMB 70/mt and premiums of positive RMB 50/mt versus SHFE 1201 copper contracts.