SMM Morning Review - 2011/12/30 Copper Market

SHANGHAI, Dec. 30 (SMM) –Yields on Italy's bonds fell below the crucial threshold of 7% Thursday, causing the euro to extend losses and slide to a 15-month low. This weighed down commodity markets. However, the US later announced a set of better-than-expected economic data, an indication the US economy is gradually recovering from the previous recession. In particular, the US housing and labor markets showed signs of strengthening, which helped US stock markets close up by more than 1%, supporting low-end LME copper prices. Nevertheless, as upward pressures were still high owing to light market activity and a lack of capitals during the Christmas holiday, LME copper prices only reached a high of USD 7,492/mt in the session, and finally ended up slightly at USD 7,428/mt.  

Friday is the last trading day of 2011, and market activity is expected to keep quiet. But upbeat economic figures from the US overnight will provide great support and help low-end LME copper prices to rise. As such, SMM anticipates LME copper prices will move between USD 7,400 -7,490/mt during Friday's Asian trading hours. Chinese stock markets will still come under pressures at the 2,200 point level since capitals can hardly flow into markets during the last trading day of the year, which will drag down high-end SHFE copper prices. Hence, SHFE copper prices will keep fluctuating after the opening, and SHFE 1203 copper contract prices will fluctuate in the RMB 54,200 -54,900/mt band. Spot copper discounts are estimated between negative RMB 450-250/mt versus SHFE 1201 copper contracts.