SMM Morning Review - 2012/6/15 Copper Market

SHANGHAI, Jun. 15 (SMM) – LME copper prices were sent down to USD 7,357/mt during Thursday's early US and European trading session, as the Spanish debt crisis deepened further because the yield on the country's 10-year government bond touched as high as 6.96%, while the credit ratings agency Egan Jones slashed France's credit rating. Nevertheless, the US later announced its jobless claims added by 386,000 last week, the fifth increase in recent six weeks. The US CPI, though, fell by 0.3% in May, the largest drop in the past three years, which heightened investor speculation that the Federal Reserve would take more monetary easing measures. The US dollar index thus extended losses and gave support to LME copper. Besides, at the tail of trading, G20 officials announced that central banks would act jointly to provide liquidity if this weekend's Greek election triggers turmoil in the financial market. In consequence, LME copper rallied above USD 7,400/mt and finally settled at USD 7,426/mt. LME copper stocks were reported to rise further Thursday, up by 1,650 mt.

Markets will remain cautious ahead of the Greek election, as the latest poll shows the anti-austerity party may win. There is possibility that some speculators may choose to build long positions ahead of the Greek election following rumors on G20 actions. Therefore, LME copper will likely edge higher, with prices expected between USD 7,410-7,480/mt during Friday's Asian trading session. The Shanghai Composite Index will try to break resistance at 2,300. SHFE copper prices will start higher before fluctuating, and risk aversion will grow gradually in the afternoon, while SHFE 1209 copper contract will hover in the RMB 54,000-54,600/mt range during the day. Spot copper premiums are estimated between positive RMB 0-110/mt versus SHFE current-month copper contract.