SHANGHAI, Jan. 14 (SMM) – Last Friday, markets were weighed down by Chinese economic figures, despite optimistic comments from the European Central Bank (ECB). It was reported that net capital flows in the US reached USD 19 billion in the week ending January 11, a fresh high since Jun 2008, which helped US equity market stop falling. Meanwhile, Italian government bond auction was successful with 3-year bond yield slipping to the lowest level in three years, and sent the US dollar index plunging to the lowest since April 2012. However, all these did not seem to reassure markets as LME copper prices extended losses, dipping to a trough of USD 8,030/mt before ending at USD 8,039/mt, a drop of as much as 1.36% and losing support at the 5 and 10-day moving average again. In other news, LME copper stocks increased sharply by 3,875 mt last Friday, despite a decline last Thursday, another factor that pushed LME copper prices down.
The euro may post strong performance during the day and provides support for LME copper. But with new resistance level at USD 8,080/mt, SMM believes that LME copper prices will move between USD 8,020-8,100/mt during Monday's Asian trading session. Chinese stock markets will extend drops. SHFE copper prices will start down and test support at RMB 58,000/mt again, but show resilience before delivery for SHFE 1301 copper contracts. SHFE 1304 copper contract will hover in the RMB 58,000-58,700/mt range. Shanghai spot copper offers are estimated between premiums of positive RMB 0-50/mt versus SHFE 1301 copper contracts.