SHANGHAI, May 23 (SMM) – The Organization for Economic Cooperation and Development (OECD) cut its growth forecast for the euro zone Tuesday, and after this, a German official said Germany would still strongly resist the move to issue euro bonds, heightening market worries over the global economic growth. Besides, there was news that former Greek Prime Minister George Papandreou said there was substantive risk in Greece exiting the euro zone, and that related preparatory work was under consideration. This ignited investor fears ahead of Wednesday's EU summit, causing the euro to dive by 1.2%. The US dollar, though, climbed to a recent-year high of 81.80. Crude oil prices retreated to around USD 91 per barrel, and gold prices slid by 0.8%. Furthermore, although the US announced better-than-expected existing home sales, the US Richmond Fed Manufacturing Index dropped sharply in May from the previous data and market estimations. US equity markets thus swung between gains and losses. With volatile movements, LME copper came under pressure in the US and European trading session, gave up all the gains registered in Asian trading session, and finally settled USD 19/mt down at USD 7,736/mt, with a considerable drop in trading volumes, as market aversion grew.
Negative news on the European debt crisis will continue to weigh the euro down. LME copper opened down below the 5-day moving average this morning and will remain weak during Wednesday's Asian trading session, with prices expected between USD 7,620-7,720/mt. Chinese stock markets will suffer resistance at around the 10-day moving average. SHFE copper will open lower and test support at RMB 55,000/mt, while SHFE 1209 copper contract will lurch in the RMB 54,800-55,500/mt band. Spot copper premiums are estimated between positive RMB 250-300/mt versus SHFE 1206 copper contract.