SMM Copper Market Morning Review (2013-1-11)

SHANGHAI, Jan. 11 (SMM) – On Thursday, the European Central Bank (ECB) announced to keep the benchmark interest rate unchanged at 0.75%, and President Mario Draghi said the euro zone's economy tended to stabilize, which significantly boosted investor confidence on financial markets. In response, the euro climbed to a five-month high, while the US dollar lost all recent moving averages, boosting commodity markets. Besides, the US and European markets continued absorbing favorable Chinese trade data, sending US equity markets closing higher. Nevertheless, as China's copper imports fell in December on a monthly basis, the further upside room in copper prices was restricted. Meanwhile, some investors did not believe China's exports will extend rebounds, despite a rapid 2.9% increase from November. As such, LME copper prices failed to gain large-scale buying support but closed at USD 8,150/mt, still up USD 83/mt. But it was worth noting that LME copper prices did not experience large increases when the US dollar slipped appreciably. Hence, copper prices are expected to fluctuate at current highs but are unlikely to rise further.  

SMM holds the view that LME copper prices will move between USD 8,080-8,160/mt during Friday's Asian trading session. Chinese stock markets will fluctuate near current levels. SHFE copper prices may challenge highs in the early trading session but narrow gains in the afternoon, and SHFE 1304 copper contract prices will hover in the RMB 58,400-58,900/mt range. Shanghai spot copper discounts are expected between negative RMB 0-120/mt versus SHFE 1301 copper contract.