SMM Morning Review - 2012/1/13 Copper Market

SHANGHAI, Jan. 13 (SMM) –As markets continued to digest positive news of China's continuously sliding CPI data for December and other economic reports in earlier US and European trading session Thursday, LME copper prices extended Asian trading session's gains. Combined with short-covering from some investors, the highest LME copper price directly pointed towards USD 8,000/mt. The US later announced the latest retail sales and weekly jobless claims came in worse than expected, fueling market worries apparent strength in recent weeks in this country could have been because of seasonal factors, which constrained commodity gains. Nevertheless, Spanish and German debt auctions in the euro zone yielded better-than-expected results later, and European Central Bank (ECB) President Mario Draghi made positive statements, boosting bullish tone for metals and other risky assets such as the euro and crude oil. As a result, the euro rose and moved away from previous lows, which helped LME copper prices expand increases and climb to a high of USD 8,074/mt. Standing stably at USD 8,000/mt, LME copper prices finally ended at USD 8,025/mt, up more than 3%, and a 2-month high.

The US dollar today will make corrections following the prior day's significant declines. Crude oil and Comex copper prices both slid this morning, indicating today's base metals trends. Together with great selling pressures at above USD 8,000/mt, LME copper prices are expected to move between USD 7,870 -8,050/mt during today's Asian trading session. Chinese stock markets will hopefully touch 2,300 points owing to positive statements from China's central bank's President Zhou Xiaochuan, providing support for SHFE copper prices. Hence, SHFE copper prices will open higher and keep fluctuating, with the highest price expected to be higher than that in early December 2011, while SHFE 1203 copper contract prices will fluctuate in the RMB 57,800-58,800/mt range. Spot copper discounts are estimated between negative RMB 300-100/mt versus SHFE 1201 copper contracts.