SMM Morning Review - 2012/3/19 Copper Market

SHANGHAI, Mar. 19 (SMM) –Last Friday, the US and European markets continued to absorb the negative news in the early trading session that copper inventories monitored by the SHFE rose to the highest level since July 2002, dampening speculative activities. However, as the US dollar slid significantly, LME copper prices still gained technical support at USD 8,500/mt and then increased slightly. Later, the US announced the preliminary consumer confidence index fell in March, and that the industrial production in February stayed flat with the previous month. The two disappointing US economic figures caused US equity markets to move lower. In this context, new short investors chose to enter the market after LME copper prices climbed to a key technical resistance at USD 8,660/mt, which led prices to fall to below USD 8,550/mt. LME copper prices experienced severe fluctuations in last Friday's US and European trading session, with prices finally ending at USD 8,527/mt, a slight drop of USD 44/mt. 

The LME market will open at 8:00 am starting from today, and LME copper prices had signs of rallying from low levels this morning. Nevertheless, the US dollar will fluctuate in a narrow band, which will cap upside copper prices. Hence, LME copper prices are expected to move between USD 8,520 -8,650/mt during today's Asian trading session. Chinese stock markets will test 2,400. SHFE copper prices will track LME copper prices to fluctuate, while SHFE 1206 copper contract prices will lurch in the RMB 60,300-61,000/mt range. Spot copper discounts are estimated between negative RMB 350-250/mt versus SHFE 1204 copper contract.