SMM Morning Review - 2012/6/20 Copper Market

Price Review & Forecast 09:41:19AM Jun 20, 2012 Source:SMM

SHANGHAI, Jun. 20 (SMM) –Spain's short-term borrowing costs climbed to their highest since 1997 Tuesday in a government bond auction, but the auction result was better than market expected. Officials of the European Union (EU) said Greece would re-negotiate conditions for the bailout deal, which helped the euro increase considerably and US stock markets close up by 1.6%, a fresh high in more than one month. Besides, the Federal Open Market Committee (FOMC) was holding a two-day policy meeting, and markets had high expectations that the Fed will extend the Operation Twist stimulus program. Goldman Sachs already said the Fed would loosen the monetary policy this week. The US later announced its housing starts remained sluggish in May, heightening market anticipation over the implementation of additional quantitative easing in the few coming weeks. In response, the US dollar index completely surrendered the previous day's gains and retreated to as low as 81.18, while US equity markets surged by nearly 1% amid improving market sentiment. LME copper thus reversed weakness in Asian trading session and finally settled USD 98/mt higher at USD 7,608/mt.  

Risk appetites have increased following market speculation over the Fed's additional stimulus measures. Moreover, members of G20 promised they will start the banking union and help push down the borrowing costs in the Euro zone, which will lead the euro to keep strong momentum during Asian trading session. However, investors will remain cautious ahead of the Fed's final decision Wednesday evening. As such, SMM believes that LME copper will move between USD 7,550-7,630/mt during Wednesday's Asian trading session. Chinese stock markets are expected to edge up. SHFE copper will start higher and then fluctuate, and SHFE 1210 copper contract will hover in the RMB 55,000-55,800/mt range. Spot copper premiums are estimated between positive RMB 250-320/mt versus SHFE 1207 copper contract.
 

SMM Morning Review - 2012/6/20 Copper Market

Price Review & Forecast 09:41:19AM Jun 20, 2012 Source:SMM

SHANGHAI, Jun. 20 (SMM) –Spain's short-term borrowing costs climbed to their highest since 1997 Tuesday in a government bond auction, but the auction result was better than market expected. Officials of the European Union (EU) said Greece would re-negotiate conditions for the bailout deal, which helped the euro increase considerably and US stock markets close up by 1.6%, a fresh high in more than one month. Besides, the Federal Open Market Committee (FOMC) was holding a two-day policy meeting, and markets had high expectations that the Fed will extend the Operation Twist stimulus program. Goldman Sachs already said the Fed would loosen the monetary policy this week. The US later announced its housing starts remained sluggish in May, heightening market anticipation over the implementation of additional quantitative easing in the few coming weeks. In response, the US dollar index completely surrendered the previous day's gains and retreated to as low as 81.18, while US equity markets surged by nearly 1% amid improving market sentiment. LME copper thus reversed weakness in Asian trading session and finally settled USD 98/mt higher at USD 7,608/mt.  

Risk appetites have increased following market speculation over the Fed's additional stimulus measures. Moreover, members of G20 promised they will start the banking union and help push down the borrowing costs in the Euro zone, which will lead the euro to keep strong momentum during Asian trading session. However, investors will remain cautious ahead of the Fed's final decision Wednesday evening. As such, SMM believes that LME copper will move between USD 7,550-7,630/mt during Wednesday's Asian trading session. Chinese stock markets are expected to edge up. SHFE copper will start higher and then fluctuate, and SHFE 1210 copper contract will hover in the RMB 55,000-55,800/mt range. Spot copper premiums are estimated between positive RMB 250-320/mt versus SHFE 1207 copper contract.