SMM Morning Review - 2012/7/11 Copper Market

SHANGHAI, Jul. 11 (SMM) – The US and European markets Tuesday continued to absorb China's weak trade data and unwrought copper and copper semis import data. Besides, although the euro zone finance ministers reached an agreement on Spain's bailout, investors were still awaiting German Constitutional Court's adjudication for the region's bailout fund. This sent the euro down to a two-year low. Furthermore, there was negative news that a customer's capital at a US futures brokerage company disappeared mysteriously and caused bearish sentiment on base metals market to grow gradually. As a result, market activity on the LME was muted during the whole day, and LME copper prices followed US equity markets to move lower, testing USD 7,482/mt before finally ending above USD 7,500/mt to USD 7,501/mt.    

Fitch has affirmed its AAA credit rating on the US but still placed on a negative outlook, imposing great pressure to markets. Investors are waiting for Germany's latest CPI data to be released Wednesday afternoon. As such, SMM believes that LME copper may drift lower, with prices expected between USD 7,460-7,520/mt during Wednesday's Asian trading session. The Shanghai Composite Index will try to hold to 2,150. SHFE copper prices will open lower before lurch feebly, and will likely trend down in the afternoon, and SHFE 1210 copper contract will hover in the RMB 54,500-55,000/mt range. Spot copper offers are estimated between premiums of positive RMB 0-80/mt versus SHFE 1207 copper contract.