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SMM Morning Review - 2012/4/17 Copper Market
Apr 17,2012 09:19CST
smm insight
Source:SMM
LME copper prices will move between USD 7,960-8,060/mt during Tuesday's Asian trading session, SHFE 1207 copper contract prices are expected to lurch in the RMB 57,200-57,800/mt range.

SHANGHAI, Apr. 17 (SMM)–As LME copper prices slid to a three-month low of USD 7,885/mt on Monday, some buying activities emerged after the US and European financial markets opened, which in turn helped LME copper prices move away from Asian trading session's lows and gradually rally to levels above USD 8,000/mt. Later, data revealed Germany bond yields hit a historical high, while Spanish 10-year bond yields soared above 6% for the first time this year. The Spanish government also acknowledged the second round of recession was possible since 2009, heightening market fears over the European debt crisis. In response, LME copper prices experienced a wave of rapid slides along with other risky assets such as crude oil and the euro, losing USD 8,000/mt again. However, the US announced the higher-than-expected increases in March's retail sales at the tail of trading, reassuring market investors somehow. Furthermore, the euro also rebounded from early low levels as short investors took profit-taking, which pushed up LME copper prices. As a consequence, LME copper prices closed at USD 8,033/mt, above the important USD 8,000/mt point, paring all the losses registered in the Asian trading session, and a gain of USD 25/mt.   

The US dollar is likely to make corrections Tuesday following significant drops on the prior day, which will cap upside room for LME copper prices plus technical resistance at the 5-day moving average. Besides, LME copper prices have yet to effectively test USD 8,000/mt after regaining this price mark on the previous day. As such, SMM believes LME copper prices will move between USD 7,960-8,060/mt during Tuesday's Asian trading session. Chinese stock markets will keep fluctuating at high levels, which will help SHFE copper prices increase to around RMB 57,500/mt after a slightly higher open. SHFE 1207 copper contract prices are expected to lurch in the RMB 57,200-57,800/mt range. In spot markets, as SHFE copper prices will edge higher, and since Tuesday is the first trading day after SHFE 1204 copper contracts were delivered, copper discounts are estimated to narrow to between positive RMB 0-50/mt against SHFE 1205 copper contracts. 
 

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