SMM Copper Market Morning Review (2013-1-10)

SHANGHAI, Jan. 10 (SMM) – LME copper prices dropped after initially rising Wednesday. Alcoa Inc reported better-than-expected earnings in 4Q and anticipated global demand for aluminum to grow in 2013, which lifted European stock markets and financial markets. US equity markets also closed higher, reversing losses in two consecutive trading days. LME copper prices thus reached a high at USD 8,144/mt during the session. However, as investors shifted their focus to China's trade data due Thursday, LME copper suffered position closings at prices above USD 8,100/mt. That, coupled with pressures brought by the US dollar index which recouped all recent moving averages, caused LME copper prices to settle slightly USD 8/mt down at USD 8,066/mt. In other news, London spot copper discounts expanded further to USD 35/mt.

Markets are upbeat about China's trade data, which will likely support LME copper prices. As such, SMM believes that LME copper prices may drift higher to USD 8,040-8,140/mt during Thursday's Asian trading session. Chinese stock markets will fluctuate narrowly. SHFE copper prices are likely to start flat and trend higher following the release of China's trade data, but meet profit-taking in the afternoon. SHFE 1304 copper contract prices will move in the RMB 58,200-58,600/mt range. Shanghai spot copper discounts are expected between negative RMB 50-150/mt versus SHFE 1301 copper contract.