SMM Morning Review - 2012/4/27 Copper Market

SHANGHAI, Apr. 27 (SMM) – The US economic figures were mixed Thursday. The US Pending Home Sales Index jumped to a near two-year high in March, but initial jobless claims fell less than market expectations last week, casting shadow over a bright economic outlook predicted by the Federal Reserve (Fed). As a consequence, LME copper price movements were restricted. However, the Fed later said it would not hesitate to introduce another round of bond purchase once the US economy was to weaken, which somehow reassured investor confidence and helped US equity markets close up. LME copper prices thus advanced to as high as USD 8,341/mt after breaking resistance at USD 8,300/mt, the 30-day moving average, and finally ended at USD 8,333/mt. In other news, spot copper premiums in London rose to USD 103/mt Thursday, which was the reason that LME copper prices kept strong performances, despite a cut in Spain's credit rating by Standard & Poor's (S&P). Nevertheless, it was worth noting that investors were not eager to keep up with rising prices, and that both positions and trading volumes for LME copper decreased to different degrees. This meant copper prices will face an uneven road to move towards highs for the near future

The euro will soften due to S&P's move of lowering Spain's credit rating, while the US dollar will rebound, capping upside room for LME copper prices. In this context, SMM predicts LME copper prices will move between USD 8,240-8,320/mt during Friday's Asian trading session, testing support at the 30-day moving average of USD 8,300/mt. Chinese stock markets will open higher. SHFE copper prices therefore will open higher too and then keep fluctuating, and position closings are likely since the May Day holiday approaches. SHFE 1208 copper contract prices will lurch in the RMB 58,000-58,800/mt range. Spot copper discounts are estimated between negative RMB 100-50/mt versus SHFE 1205 copper contract.