SHANGHAI, Mar. 29 (SMM)–The slumping Asian stock markets Wednesday directly depressed trading activities on the US and European markets, causing LME copper prices to extend losses in the early trading session. Germany then announced its lower-than-expected Consumer Price Index (CPI) for March, which weighed on the euro and led commodity prices to experience the first round of drops. The US later announced that its durable goods orders in February rose by 2.2%, far below a 3.0% increase anticipated by markets, so US equity markets closed with losses. Combined with bearish statements from Goldman Sachs, which said it was shifting its recommendation on commodities from "overweight" to "neutral", bearish sentiment began to dominate markets at the tail of trading, and LME copper prices experienced another wave of slides along with stocks, crude oil, and other base metal prices. LME copper prices thus retreated to levels near the 60-day moving average, down as low as USD 8,327/mt. Nevertheless, due to technical support at the 60-day moving average, LME copper prices recouped some of early losses before finally ending at USD 8,360/mt, still a decline of nearly 2%. It was worth noticing that, despite considerable drops and great upside pressures, LME copper prices showed more resilience than other base metals.
Moody's lowered credit ratings for five banks in Portugal this morning, while Fitch said the euro zone will keep receding at least in the first half of this year, both of which will dampen the euro. However, as markets are awaiting the release of GDP data from the US in the evening, markets are unlikely to suffer great selling pressures and will be dominated by cautious sentiment. As such, SMM believes that LME copper prices will fluctuate weakly between USD 8,350-8,450/mt during Thursday's Asian trading session. Chinese stock markets will extend the losing streak after a low open. SHFE copper prices will open near RMB 60,000/mt and fluctuate in a narrow bank during the day, while SHFE 1206 copper contract prices will move in the RMB 59,800-60,200/mt range. In spot markets, slight declines in SHFE copper prices are favorable for downstream producers to replenish stocks before the Qingming Festival, but market surpluses will likely sustain as March ends. Hence, spot copper discounts are estimated to stay flat with the prior day levels, between negative RMB 280-200/mt versus SHFE 1204 copper contracts.