SMM Copper Market Morning Review (2013-1-4)

SHANGHAI, Jan. 4 (SMM) – The US economic figures were mixed Thursday. The US Labor Department announced that the US initial jobless claims were 372,000 in the week ending December 29, higher than expected. But the ADP non-farm payrolls added by 215,000 in December, well above analysts' anticipation. The Fed's minutes revealed that some policymakers were cautious toward further expanding asset liability, although the Fed will definitely continue buying government bonds. The US dollar thus climbed and closed Thursday at 80.622, weighing down base metals. LME copper prices surrendered earlier gains as a consequence, and settled at USD 8,149/mt, down USD 51/mt from the previous trading day. 

Although the US budget talks were successful, market worries over the Fed's stimulus measures are increasing. Investors are also eying the result of the US nonfarm payroll report to be announced Friday evening. Investors should remain cautious during the first trading day following the New Year holiday. As such, SMM believes that LME copper prices will fluctuate between USD 8,100-8,200/mt during Friday's Asian trading session, and SHFE 1304 copper contract will hover in the RMB 58,500-59,300/mt range. Shanghai spot copper discounts are estimated between negative RMB 120-220/mt versus SHFE 1301 copper contract.