SMM Morning Review - 2012/2/9 Copper Market

SHANGHAI, Feb. 9 (SMM) –During early US and European trading session Wednesday, as China's central bank vowed to support the country's property market, a move seen by investors as a signal of big demand from the world's largest copper consumer, LME copper prices were pushed to a high of USD 8,652/mt. However, Greek debt talks later failed to yield any result, which continued to weight down copper markets. Combined with the fact market focus shifted to important Chinese economic data due Thursday, some investors made profit-taking. As a result, upward momentum weakened, and LME copper prices gradually narrowed gains at the tail of trading and finally settled at USD 8,578/mt. The proportion of cancelled warrants to total LME copper inventories decreased Wednesday.

China will release the latest CPI data and other key economic figures, and if the CPI data came in as market expected, investors will continue to keep optimistic towards loosening monetary policy from the central bank. Nevertheless, buying for LME copper at the highs will be limited amid increasing risks. As such, SMM expects LME copper prices to keep fluctuating at high levels during Thursday's Asian trading session, between USD 8,500 -8,680/mt. Chinese stock markets will fluctuate in a narrow band following the previous day's surges. Low-end SHFE copper prices will track LME copper prices higher, while SHFE 1204 copper contract prices will move in the RMB 60,500 -61,600/mt range. Spot copper discounts are estimated between negative RMB 300-150/mt versus SHFE 1202 copper contracts.