SMM Morning Review - 2012/4/5 Copper Market

SHANGHAI, Apr. 5 (SMM) – LME copper had a rollercoaster ride during the Qingming Festival holiday. The red metal surged 2% to USD 8,620/mt on Monday backed by strong Chinese and US manufacturing data, surrendered most gains through a higher opening on Tuesday due to short selling at high-end prices and an unexpected jump in LME copper stocks, and plunged 3% on Wednesday to USD 8,362/mt as Fed meeting minutes dampened QE3 hopes and ECB President’s warning of downside risks for the euro zone economy added to the appeal of the safer US dollar. It was noticeable that cancelled LME warrants had dropped during its rollercoaster ride and support from the fundamentals side may weaken slightly as a result.

The return of Asian investors and a LME trading halt on Friday will limit the downward space of LME copper, which is expected to move narrowly between USD 8,350/mt and USD 8,450/mt during today’s trading. The SHFE copper contract for July delivery is expected to move between RMB 59,500/mt and RMB 60,500/mt with a stable Shanghai Composite Index following a lower opening. In the spot market, liquidating with imported copper will weaken slightly at month’s beginning, which will help narrow spot discounts. SMM expects spot copper to trade between discounts of RMB 220/mt and RMB 150/mt over the SHFE current-month copper contract.