SMM Morning Review - 2012/1/11 Copper Market

SHANGHAI, Jan. 11 (SMM) –Positive and negative factors piled up in the US and Europe Tuesday. While markets continued to absorb China's record high copper import data for December 2011, worries over the euro zone also eased some since Fitch further confirmed Germany's AAA credit rating and said it would not give a downgrade this year. At the same time, Hungary's government held talks with the International Monetary Fund (IMF), and markets speculated that they would probably later sign a loan contract. Besides, Greek government was close to reach consensus with private creditors on bond swap, which played a key role in getting the second round of bailout funds. Market risk appetites therefore improved somewhat, causing US equities to close higher. As a result, extending Asian trading session's gains, LME copper prices broke out USD 7,700/mt and finally ended at a recent high of USD 7,725/mt, a surge of 3%.

Comex copper prices slid sharply this morning, despite the previous day's positive news. LME copper prices may face selling pressures at highs today, so any upside room will be limited. Hence, LME copper prices will move between USD 7,600-7,780/mt during today's Asian trading hours, with low-end expected to test support at the 60-day moving average. Chinese stock markets will continue to surge. Therefore, SHFE copper prices will open higher and find daily support at RMB 56,000/mt, while SHFE 1203 copper contract prices will fluctuate in the RMB 56,000-56,800/mt range. Spot copper offers are estimated between discounts of negative RMB 200-50/mt.