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SMM Copper Market Morning Review (2012/10/8)
Oct 8,2012 10:16CST
price review forecast
SHFE 1301 copper prices will hover between RMB 59,000-59,800/mt. In the spot market, discounts are expected to expand to RMB 100-50/mt over SHFE 1210 copper contract between.

SHANGHAI, Oct. 8 (SMM) – LME copper prices generally moved between USD 8,200-8,400/mt over this past week due to the absence of Chinese investors for the Mid-Autumn Festival and National Day holidays.


Macro-economic news was mixed. Greece unveiled the draft 2013 budget last Monday, and painful cuts will be brought forward as the country is expected to be a sixth year of recession. In what came as a surprising move, the Reserve Bank of Australia cut their target interest rate by 25 basis points to 3.25%, the third cut over the past six months. In China, the manufacturing PMI for September came in at 49.8, up from August’s 47.6. The final Markit Eurozone Manufacturing PMI was 46.1 in September, higher than the flash reading and market expectations, both standing at 46.0. In Italy, the Markit/ADACI manufacturing PMI reached 45.7, the highest since March, and markets expected the reading at 44.2. In Germany, the Markit/BME manufacturing PMI was 47.4, beating market estimation at 47.3. The US ISM manufacturing PMI for September was 51.5, higher than the preliminary data of 49.6, and also beating market expectations at 49.8. The final US Markit manufacturing PMI for September, however, hit the lowest level since September 2009. The reading of 51.1 was lower than market estimation and flash reading, which both stood at 51.5.


Moreover, the US non-farm payrolls were up by 114,000, missing market expectations over a rise of 120,000, but the US unemployment rate dropped to 7.8%, better than market expectations of 8.2%, the lowest level since January 2009, helping US equities gain. Besides, increased risk appetite weakened the dollar, supporting copper prices. 


Last Friday, LME copper prices ended at USD 8,257/mt, down USD 58/mt on a weekly basis. During the holiday period, LME cancelled warrants were up significantly, with the proportion exceeding 24%. Meanwhile, LME spot premiums returned to the market, helping LME copper outperform other metals. 


The euro will come under downward pressures amid market concerns over Greek aid delay and worries over Spanish debt. LME copper is expected to find support at USD 8,200/mt, and during Asian hours will move between USD 8,200-8,280/mt. With the lack of rising momentum in domestic stocks market, SHFE 1301 copper prices will hover between RMB 59,000-59,800/mt. In the spot market, discounts are expected to expand following the approach of delivery date, with discounts over SHFE 1210 copper contract between RMB 100-50/mt.


LME copper
SHFE copper
China copper market

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