SMM Copper Market Morning Review (2013-1-9)

SHANGHAI, Jan. 9 (SMM) – The macro news front remained quiet Tuesday. The US debt ceiling problem was still unresolved, as the Bipartisan Policy Center (BPC) estimates the US government will use up all funds on February 15, sending the US equity markets closing down for two consecutive days. Germany announced export value registered the biggest drop in more than one year in November 2012, but the euro zone released mixed economic data. The euro zone's enterprise confidence index continued improving in December 2012, but the unemployment rate rose to a historical high of 11.8% in November 2012 from October's 11.7%. In response, the euro trended down while market risk appetites abated. Investors generally awaited China's economic figures to be reported later this Thursday, so LME copper prices fluctuated comparatively narrowly and slipped to a trough of USD 8,040/mt before ending at USD 8,074/mt, a slight loss of USD 13/mt. In other news, London spot copper discounts expanded to USD 34/mt the same day and should weigh on copper prices over the near term. 

The euro faces bigger risks of moving lower. Coupled with great pressure at USD 8,100/mt, LME copper prices will likely move between USD 8,020-8,100/mt during Wednesday's Asian trading session. Domestic stock markets will extend weakness. SHFE copper prices may drift lower, and SHFE 1304 copper contract will hover in the RMB 57,900-58,400/mt range. Shanghai spot copper discounts are estimated between negative RMB 50-150/mt versus SHFE 1301 copper contract.