SMM Morning Review - 2012/1/12 Copper Market

SHANGHAI, Jan. 12 (SMM) –Spain and German announced softer-than-expected economic data in Wednesday's earlier session. Euro zone's GDP for 3Q 2011 also continued to slide, and Fitch issued warns at this point that the ECB should take more actions to prevent this region from collapsing, heightening market concerns over Europe's future economic development. The euro therefore retreated to a 16-month low, which pushed LME copper prices down to earlier session level of near USD 7,680/mt from an intraday high of USD 7,830/mt. Nevertheless, short investors closed positions on a large scale after LME copper prices returned to lows, since analyst at Trafigura, a large commodity trading company, said LME copper prices could still possibly touch nearly USD 10,000/mt threshold before the end of the year. As a result, LME copper prices slowly increased to a level near the daily high and finally ended at USD 7,805/mt, up USD 80/mt.

China will release December's CPI data today, providing guidance for LME copper price trends. However, as upside technical resistance persists, LME copper prices will keep fluctuating at high levels during today's Asian trading session, with prices expected between USD 7,750 -7,850/mt. Chinese stock markets will likely rally to 2,300 points. Hence, SHFE copper prices will extend gains after opening higher, while SHFE 1203 copper contract prices will move in the RMB 56,500-57,500/mt range. Spot copper discounts are estimated between negative RMB 200-100/mt.