SMM Morning Review - 2012/3/27 Copper Market

SHANGHAI, Mar. 27 (SMM)–Federal Reserve (Fed) Chairman Ben Bernanke said Monday that, although the US unemployment rate improved, the Fed will keep its accommodative monetary stance, heightening market expectations about the implementation of QE3 measures. In response, the US dollar slid below 79, lifting the euro to a three-week high. Risk assets on commodity markets surged all across the board, with prices of base metals, precious metals, crude oil, and US equities increasing. LME copper prices advanced all the way in the evening, and continued to trend higher after breaking resistance at recent moving averages. Nevertheless, the US later announced its pending home sales in February fell by 0.5%, softer significantly than a surge of 1% expected by markets, an indication that a substantive improvement in the US housing market need more days. This propelled investors to conduct profit-taking instead of increasing purchases. LME copper prices, though, still ended at an intraday high at USD 8,568/mt, taking a lead in other base metals. However, it was worth noticing that price gains in base metals failed to exceed 1% except for copper and tin, with most still moving below their moving averages. Therefore, SMM advises investors should take cautious sentiments since copper price gains overnight may not be as optimistic as markets expected. 

LME copper prices opened at USD 8,550/mt this morning and tended to fluctuate in a narrow band, but Comex copper prices had signs of moving lower. Hence, LME copper is likely to test the daily moving average and give up some of Monday's increases, with prices expected between USD 8,450-8,570/mt during today's Asian trading session. Chinese stock markets will meet resistance at the 5-day moving average after a high open. SHFE copper prices will also open higher, but buying will be cautious, with great pressures at RMB 61,000/mt, while SHFE 1206 copper contract prices will fluctuate in the RMB 60,300-61,300/mt range. Spot copper discounts are estimated to expand to between negative RMB 380-280/mt versus SHFE 1204 copper contracts.