SMM Morning Review - 2012/2/10 Copper Market

SHANGHAI, Feb. 10 (SMM) –Greece's political leaders finally reached an agreement on a set of austerity measures and reforms Thursday following long delay, opening the door for the EU, IMF and other European countries to offer the second round of bailout deal for the country, and also clearing the way for Greece to finish the budget-cutting deal with private creditors as soon as possible. The President of the ECB Mario Draghi would likely provide 130-billion-euro to Greece in the second round of bailout package, which boosted market risk appetites. In response, the euro increased considerably, pushing up LME copper prices. Besides, the US later announced initial jobless claims fell further to 235,000, below the prior data and market anticipation, and this resulted in a high close in US equities. As a result, LME copper prices gained momentum and jumped to USD 8,700/mt from USD 8,600/mt before finally ending at a recent high of USD 8,740/mt, a surge of more than 2%.

Positive news overnight will continue to prop up LME copper price trends during today's Asian trading session, but profit-taking at the highs will dampen the upward momentum. Furthermore, Comex copper prices experienced two rounds of rapid slides this morning. As such, SMM expects LME copper prices to move between USD 8,620-8,780/mt, with limited upside room. Chinese stock markets will open higher impacted by rising US equities overnight. SHFE copper prices will try to stabilize further after a high open, while SHFE 1205 copper contract prices will fluctuate in the RMB 61,500-62,800/mt range. Spot copper discounts are estimated between negative RMB 250-80/mt versus SHFE 1202 copper contracts.