SMM Morning Review - 2012/2/7 Copper Market

SHANGHAI, Feb. 7 (SMM) –LME copper prices remained weak during early US and European trading session Monday. An official of European Commission said in the evening Greece had gone beyond the deadline for finalizing talks on a second financing package from the euro zone and the International Monetary Fund (IMF), adding that Athens needed urgently to make decisions. Combined with the fact that Greece hadn't yet approved the new bailout plan, market worries were ignited the European debt crisis may spread again, causing the euro to experience a round of rapid slides and the US dollar to move upward. As a result, LME copper prices lowered to test support at the 10-day moving average of USD 8,430/mt, but then pared some losses after gaining temporary support, with prices finally settling at USD 8,510/mt.

Asian markets today will continue to absorb last night's negative news about Greece, and market sentiment is expected to remain cautious. Comex copper prices inched down this morning, signaling LME copper prices will face great resistance to move higher. As such, SMM believes LME copper prices will move between USD 8,430-8,530/mt during today's Asian trading session. Chinese stock markets will move at above 2,300 points. SHFE copper prices will fluctuate after a low open, while SHFE 1204 copper contract prices will fluctuate in the RMB 60,000 -60,900/mt range. Spot copper discounts are estimated between negative RMB 350-180/mt versus SHFE 1202 copper contracts.