SMM Morning Review - 2012/7/5 Copper Market

SHANGHAI, Jul. 5 (SMM) – Spain was designed to introduce a new austerity measure of EUR 30 billion Wednesday, while the cost for rescuing Cyprus' banking industry may reach EUR 10 billion. Meanwhile, France announced it will levy heavy taxes on rich people and large enterprises. All these reignited market concerns over the euro zone's prospects. Besides, the US markets were closed for a holiday Wednesday and depressed market activity on the LME, while the European Central Bank (ECB) would announce its interest rate decision very soon. In this context, investors in the evening continued to sell the euro, which trended down below all recent moving averages. LME copper thus kept fluctuating weakly between USD 7,700-7,730/mt in the evening and finally settled at USD 7,720/mt, down USD 64/mt. In other news, spot copper offers in London turned to slight discounts Wednesday from recent premiums, so investors should pay close attention to further changes in LME copper's fundamentals side.   

There is news European finance ministers will not provide no more than EUR 100 funds to Spain at the regular meeting to be held next Monday and Tuesday, and that the conclusion of an agreement bolstering the country's banking sector will also be postponed. In response, the latest Italian and Spanish bond yields have risen. Coupled with the fact that Sweden's central bank unexpectedly announced to keep the existing interest rates unchanged, investors should keep cautious ahead of releases of the ECB's interest rate meeting results. The euro therefore will lurch Thursday. LME copper will also fluctuate narrowly around USD 7,700/mt, with prices expected between USD 7,670-7,750/mt during Thursday's Asian trading session. Chinese stock markets will extend weakness and cause SHFE copper prices to start lower with the 60-day moving average becoming the new resistance. SHFE 1210 copper contract will hover in the RMB 55,600-56,300/mt range. Spot copper offers are estimated between discounts of negative RMB 50/mt and premiums of positive RMB 50/mt versus SHFE 1207 copper contract.