SMM Morning Review - 2012/7/30 Copper Market -Shanghai Metals Market

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SMM Morning Review - 2012/7/30 Copper Market

Price Review & Forecast 09:37:20AM Jul 30, 2012 Source:SMM

SHANGHAI, Jul. 30 (SMM) – The financial market extended rebounds last Friday. Favorable news out of the euro zone increased, despite reports that Spain may need a full bailout worth EUR 300 billion and that the region's unemployment rate for 2Q hit a 36-year high. After the European Central Bank (ECB) President Mario Draghi promised to do everything to prevent the euro zone from breaking up, both German Chancellor Angela Merkel and French President Franois Hollande stated that they would also do everything to save the region. Besides, Europe may purchase bonds, cut interest rates, and conduct LTRO, while there was news Italy would extend the ban on short-selling of bank stocks until September 14. All these factors helped the euro post strong performance, up to a three-week top, while European stock markets surged by over 1.3%. Later, the US announced that GDP growth for 2Q slowed to 1.5%, in line with market anticipation, which raised market speculation that the Federal Reserve would announce the third round of bound purchase plan very soon. As a result, US equity markets closed higher and led LME copper prices to keep rebounding, up to as high as USD 7,585/mt before finally settling USD 97/mt up at USD 7,566/mt.

Comments from Draghi, Merkel, and Hollande should help the euro remain strong over the near term, while market expectations that the ECB would take additional stimulus measures are heightening. As such, SMM holds the view that LME copper prices will move at high levels during Monday's Asian trading hours, drifting slightly higher to USD 7,530-7,600/mt. Chinese stock markets will meet great pressures. SHFE copper prices will start higher before fluctuating, while SHFE 1211 copper contract prices will hover in the RMB 54,500-55,100/mt range. Spot copper offers are estimated between premiums of positive RMB 50-150/mt versus SHFE 1208 copper contract.
 

SMM Morning Review - 2012/7/30 Copper Market

Price Review & Forecast 09:37:20AM Jul 30, 2012 Source:SMM

SHANGHAI, Jul. 30 (SMM) – The financial market extended rebounds last Friday. Favorable news out of the euro zone increased, despite reports that Spain may need a full bailout worth EUR 300 billion and that the region's unemployment rate for 2Q hit a 36-year high. After the European Central Bank (ECB) President Mario Draghi promised to do everything to prevent the euro zone from breaking up, both German Chancellor Angela Merkel and French President Franois Hollande stated that they would also do everything to save the region. Besides, Europe may purchase bonds, cut interest rates, and conduct LTRO, while there was news Italy would extend the ban on short-selling of bank stocks until September 14. All these factors helped the euro post strong performance, up to a three-week top, while European stock markets surged by over 1.3%. Later, the US announced that GDP growth for 2Q slowed to 1.5%, in line with market anticipation, which raised market speculation that the Federal Reserve would announce the third round of bound purchase plan very soon. As a result, US equity markets closed higher and led LME copper prices to keep rebounding, up to as high as USD 7,585/mt before finally settling USD 97/mt up at USD 7,566/mt.

Comments from Draghi, Merkel, and Hollande should help the euro remain strong over the near term, while market expectations that the ECB would take additional stimulus measures are heightening. As such, SMM holds the view that LME copper prices will move at high levels during Monday's Asian trading hours, drifting slightly higher to USD 7,530-7,600/mt. Chinese stock markets will meet great pressures. SHFE copper prices will start higher before fluctuating, while SHFE 1211 copper contract prices will hover in the RMB 54,500-55,100/mt range. Spot copper offers are estimated between premiums of positive RMB 50-150/mt versus SHFE 1208 copper contract.