SMM Morning Review - 2012/9/4 Copper Market

SHANGHAI, Sept. 4 (SMM) – Markets still focused on weak global PMI data Monday and expected central banks would introduce additional economic stimulus. Several European countries issued bonds wildly ahead of the European Central Bank's (ECB) meeting, but German finance minister warned that markets should not expect too much from the ECB, which have not intervened in bond markets for 25 weeks. Besides, as US equity markets were closed for Labor Day, LME copper market activity was relatively muted. As such, LME copper kept fluctuating at the highs with noticeable resistance at USD 7,700/mt, and finally ended at USD 7,660/mt, a gain of USD 69/mt.

Moody's announced to place the European Union's 3A credit rating to negative, while Spain's Andalusia region requested EUR 1 billion rescue funds from the government, which will weigh copper prices down. But SMM believes that LME copper should continue fluctuating at the highs and move between USD 7,620-7,720/mt during Tuesday's Asian trading session. A-shares will lower to test the 5-day moving average. SHFE copper prices will lurch around RMB 56,000/mt, and SHFE 1212 copper contract will hover in the RMB 55,600-56,400/mt range. Spot copper premiums are estimated to stay firm between positive RMB 0-80/mt against SHFE 1209 copper contract.