Metals News
SMM Morning Review - 2012/1/30 Copper Market
smm insight

SHANGHAI, Jan. 30 (SMM) -- LME copper prices climbed continuously during the Chinese New Year holiday, with prices rising from USD 8,200/mt to USD 8,679/mt and even standing above the 30-day moving average, posting a weekly gain of 3.95%. The PMI of Eurozone manufacturing sector in January was better than market expectations and initial data, helping push up the euro. The US Federal Reserve pledged to maintain low interest rates by at least the end of 2014, raising market expectations of the launch of QE3 and weighing down the US dollar index to 78. In addition, bullish market fundamentals helped push up LME copper prices to a high of USD 8,679/mt. However, as the US GDP in 4Q was lower than expected, increases in LME copper prices were restricted, with prices finally closing at USD 8,570/mt and cancelled warrants increasing by nearly 26%.

SMM expects LME copper prices to fluctuate between USD 8,450-8,650/mt. SHFE copper prices will track LME copper price trends after opening higher, but as the Shanghai Composite Index faced resistance at the 60-day moving average, SHFE 1204 copper contract prices are expected to hover between RMB 61,400-62,800/mt. Although SHFE copper prices surged, cargo-holders are unwilling to sell goods at high discounts on the first trading day following the Chinese New Year holiday, so SMM predicts spot discounts are expected to move between negative RMB 350-250/mt over SHFE 1202 copper contract prices.


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