SHANGHAI, Jan. 30 (SMM) – Chinese Academy of Social Sciences (CASS) raised Chinese economic growth forecast for 2013 from 8.2% to 8.4% Tuesday and buoyed market optimism. In the evening, Pfizer Pharmaceuticals and Valero Energy reported higher-than-expected earnings. However, Ford Motor shares fell 4.64% after earnings report, while shares of Amazon rose 9.2%. The US economic figures also came in mixed, with the consumer confidence index in January dropping to 58.4, the lowest since November 2011, which heightened market worries over economic recovery in the world's largest economy and sent base metals slipping. Nevertheless, the US home price index increased in November, a proof that the US housing market continues recovering. Copper prices rebounded following this positive data. US equity markets swung between gains and losses during the day, but with the Dow Jones Industrial Average seeing a fresh high in settlement price since October 2007. Meanwhile, the US dollar index dipped considerably on investors' upbeat attitudes towards the Fed's upcoming two-day policy meeting, also lending support to copper prices. As such, LME copper prices surged after sliding to a low of USD 8,036/mt, and closed USD 63/mt higher at USD 8,112/mt. It was worth noting that LME copper stocks increased significantly by over 30,000 mt the same day, up to as high as more than 370,000 mt, while the proportion of cancelled warrants to total LME copper stocks fell to less than 10%. But owing to escalating tension in the Middle East and news that an oil refinery will be closed in the US east coast, NYMEX three-month light sweet crude oil contract closed at USD 97.57/bbl, a gain of as high as 1.2%, and breaking the USD 97/bbl mark for the first time since mid-December last year. This indicated optimistic copper price trend for the near future.
Market activity should remain cautious while markets await US employment data and GDP data. However, a weak US dollar will help LME copper prices fluctuate high between USD 8,060-8,140/mt during Wednesday's Asian trading session. Chinese stock markets will also hover at high levels. SHFE copper prices will open slightly up and then drift higher, and SHFE 1305 copper contract will move in a range of RMB 58,600-59,200/mt. Shanghai spot copper discounts are estimated between RMB 120-220/mt versus SHFE 1302 copper contract.