SMM Morning Review - 2012/1/17 Copper Market

SHANGHAI, Jan. 17 (SMM) –Market activity on the LME was comparatively light Monday, as the US financial market was shut, and since investors were awaiting the release of China's GDP data and other key economic figures due Tuesday. Nevertheless, LME copper inventories continued to fall, and the proportion of canceled warrants to total LME copper inventories stood high at 19.02%, which helped LME copper prices drift slightly higher during the European trading session, with an intraday high at around USD 8,110/mt. Finally, LME copper prices ended at USD 8,052/mt, an increase of USD 46/mt.

Despite the uptick in recent copper price movement, China will announce key economic data today, and markets commonly expect the GDP data to slide, which will influence LME copper price trends somehow. Besides, Standard & Poor's (S&P) lowered long-term issuer credit rating on the European Financial Stability Facility (EFSF) Monday, which will dampen LME copper prices. Hence, LME copper prices will move between USD 7,900-8,100/mt during today's Asian trading session. Chinese stock markets will test support at 2,200 points. As such, SHFE copper prices will likely experience a round of rises before falling, while SHFE 1204 copper contract prices will fluctuate in the RMB 57,500-58,700/mt band. Spot copper discounts are estimated between negative RMB 400-200/mt versus SHFE 1202 copper contracts.