SHANGHAI, May. 4 (SMM) –The US announced Thursday that the ISM's non-manufacturing PMI came in at 53.5 in April, lower than market anticipations of 55.3 and March's level, which dampened market confidence over a mild recovery in the US economy. Spain successfully sold EUR 2.5 billion in 3- and 5-year bonds, but its bond yields soared, meaning that investors were still worried over the European debt crisis. In response, the US and European stock markets closed with losses, with the Dow Jones Industrial Average sliding by 62 points. LME copper prices thus fell unilaterally in the evening, down below the 10- and 30-day moving averages before retreating as low as USD 8,200/mt, and a daily drop of 1.09%. LME copper prices finally ended the day at USD 8,215/mt but still gained support at the 20-day moving average. In other news, LME copper stocks decreased by 3,750 mt to 235,200 mt Thursday, while the proportion of canceled warrants to total stocks stood at 31.57%. Besides, despite a slight decline from the previous days, spot copper premiums in London still stood at relatively high levels of USD 70/mt, implying that long investor activity prevails.
Economic data in the US and Europe remains sluggish, while the US dollar moves towards the 20-day moving average, heightening bearish sentiment in markets. Crude oil and base metals have declined sharply, with LME copper prices already sliding below the 10-day moving average and looking for support at USD 8,200/mt. As such, SMM believes LME copper prices will test the 20-day moving average and move between USD 8,200-8,300/mt during Friday's Asian trading session. Chinese stock markets are expected to move above the 5-day moving average and help cap SHFE copper downside room. SHFE 1208 copper contract will decline below the 5-day moving average before searching for support at the 10-day moving average, with prices anticipated between RMB 57,700-58,500/mt. Spot copper premiums are estimated between positive RMB 20-80/mt versus SHFE current-month copper contract.