SHANGHAI, May. 7 (SMM) – LME copper prices insisted on levels above the USD 8,200/mt mark in early US and European trading hours last Friday, as SHFE copper stocks were reported to decreased by 4% to the lowest since February this year. Later, the US announced April non-farm payrolls rose by 115,000, well below market anticipation of a gain of 170,000, and also below March's revised increase of 154,000. This ignited market worries over the health of the global economy, sending US equity markets down by more than 1% but helping the US dollar climb stably to as high as 79.52 for a safe-haven. Crude oil prices dived by nearly 4%, losing USD 100 per barrel. LME copper prices thus experienced a round of rapid slides before falling to USD 8,146/mt, but finally closed at USD 8,193/mt due to technical support, still a drop of USD 21/mt. Besides, despite weak support at the 20-day moving average, LME copper inventories fell to the lowest level since October 2008 last Friday, which helped LME copper exhibit some resilience.
The LME market is closed Monday for Bank Holiday. The US dollar opened higher at 80 this morning and will dampen copper futures price movements. The Shanghai Composite Index will fluctuate narrowly above 2,400. SHFE copper prices will also hover in a narrow band after a low open, given a lack of guidance from LME copper, with SHFE 1208 copper contract prices expected between RMB 57,500-58,300/mt during Monday's Asian trading hours. In spot markets, despite a drop in SHFE copper prices, spot copper premiums are unlikely to increase further, since both traders and downstream producers do not accept higher premium levels. SMM therefore believes spot copper premiums will move between positive RMB 50-100/mt versus SHFE current-month copper contract.