SMM Morning Review - 2012/7/26 Copper Market -Shanghai Metals Market

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SMM Morning Review - 2012/7/26 Copper Market

Price Review & Forecast 09:46:50AM Jul 26, 2012 Source:SMM

SHANGHAI, Jul. 26 (SMM) – The market news front was mixed Wednesday. European Central Bank governing council member and President of Austria's central bank Ewald Nowotny said when accepting interviews that there was ongoing discussion over giving a banking license to the ESM. Besides, the Wall Street Journal reported that Fed officials may take new measures very soon to boost economy and the labor market. Comments from both Ewald Nowotny and Fed officials sent the euro rebounding from a two-year low and helped lift LME copper rally from earlier lows, up to as high as USD 7,497/mt. However, at the tail of trading, the US Commerce Department released a report showing that US new home sales in June dropped unexpectedly by 8.4% MoM in June to a seasonally adjusted annual rate of 350,000, below the market expectation of 370,000, and also the lowest level in five months. This indicated the US economic recovery is still worrisome, which caused US equity markets to narrow daily gains. Meanwhile, Egan-Jones slashed Italy's credit rating and said that the country's default risk reached as high as 22%, while Moody's also announced to lower the outlook on 17 German banking groups from stable to negative, and turned the outlook on government guarantee tools of some German banks as well as some government related issuers to negative, citing that this move was largely impacted by a downgrade of Germany's credit rating. In consequence, LME copper gave up daily increases and finally finished at USD 7,479/mt, but ending a down close for some consecutive days. Nevertheless, from market activity, investors were not too acceptable for this round of rebounds and still awaited future copper price trends.     

As major international credit rating agencies showed concerns over the euro zone's current situation and opted to cut the region, yields on Spain's 5-year bonds grew higher than those on 10-year bonds, raising market worries that the country may need a full bailout. The euro thus will fluctuate weakly around its 5-day moving average following overnight rebounds. As such, LME copper prices will stop at their 5-day moving average and move between USD 7,390-7,480/mt during Thursday's Asian trading session. Chinese stock markets will continue to come under pressure at moving averages. SHFE copper prices will trend down after starting higher and may suffer another round of dampens before surrendering daily gains, and SHFE 1211 copper contract will hover in the RMB 53,800-54,800/mt range. Spot copper offers are estimated between premiums of positive RMB 50-150/mt versus SHFE 1208 copper contract.
 

SMM Morning Review - 2012/7/26 Copper Market

Price Review & Forecast 09:46:50AM Jul 26, 2012 Source:SMM

SHANGHAI, Jul. 26 (SMM) – The market news front was mixed Wednesday. European Central Bank governing council member and President of Austria's central bank Ewald Nowotny said when accepting interviews that there was ongoing discussion over giving a banking license to the ESM. Besides, the Wall Street Journal reported that Fed officials may take new measures very soon to boost economy and the labor market. Comments from both Ewald Nowotny and Fed officials sent the euro rebounding from a two-year low and helped lift LME copper rally from earlier lows, up to as high as USD 7,497/mt. However, at the tail of trading, the US Commerce Department released a report showing that US new home sales in June dropped unexpectedly by 8.4% MoM in June to a seasonally adjusted annual rate of 350,000, below the market expectation of 370,000, and also the lowest level in five months. This indicated the US economic recovery is still worrisome, which caused US equity markets to narrow daily gains. Meanwhile, Egan-Jones slashed Italy's credit rating and said that the country's default risk reached as high as 22%, while Moody's also announced to lower the outlook on 17 German banking groups from stable to negative, and turned the outlook on government guarantee tools of some German banks as well as some government related issuers to negative, citing that this move was largely impacted by a downgrade of Germany's credit rating. In consequence, LME copper gave up daily increases and finally finished at USD 7,479/mt, but ending a down close for some consecutive days. Nevertheless, from market activity, investors were not too acceptable for this round of rebounds and still awaited future copper price trends.     

As major international credit rating agencies showed concerns over the euro zone's current situation and opted to cut the region, yields on Spain's 5-year bonds grew higher than those on 10-year bonds, raising market worries that the country may need a full bailout. The euro thus will fluctuate weakly around its 5-day moving average following overnight rebounds. As such, LME copper prices will stop at their 5-day moving average and move between USD 7,390-7,480/mt during Thursday's Asian trading session. Chinese stock markets will continue to come under pressure at moving averages. SHFE copper prices will trend down after starting higher and may suffer another round of dampens before surrendering daily gains, and SHFE 1211 copper contract will hover in the RMB 53,800-54,800/mt range. Spot copper offers are estimated between premiums of positive RMB 50-150/mt versus SHFE 1208 copper contract.