SMM Copper Market Morning Review (2013-2-18)

SHANGHAI, Feb. 18 (SMM) – The US economic figures were mixed during the Chinese New Year holiday period, but the euro zone's data was unfavorable, casting a shadow over base metals demand outlook. In response, the euro began falling again and touched a three-week low, but the US dollar rallied and touched a high of 80.621. US equity markets and risk assets including oil, however, suffered resistance at highs, while gold and silver staged weak performance and saw the largest weekly decline thus far this year. Commodity markets also stagnated. The two-day meeting of finance ministers and central bank governors of the Group of 20 (G20) took place in Moscow on February 15, which kept investors on the sidelines. In this context, LME copper fluctuated between USD 8,200-8,280/mt during the holiday period and struggled around the 10-day moving average, with the settlement price at USD 8,240/mt. LME copper stocks increased by 1,900 mt or 0.6% to as high as 401,675 mt during the week, the highest since November 15, 2011. But the proportion of cancelled warrants to total LME copper stocks remained low at around 8%. Copper's weak fundamentals side should give some pressures to LME copper prices over the short term. However, with Asian investors returning to markets, trading sentiment will improve and help LME copper maintain strong performance.

A strengthening US dollar will weigh on copper prices somehow, but improved trading sentiment will help LME copper prices fluctuate at highs between USD 8,200-8,260/mt during Monday's Asian trading session. Chinese stock markets are expected to rebound. SHFE copper prices will also fluctuate at highs after starting flat, and SHFE 1305 copper contract will hover in a range of RMB 59,400-59,900/mt. As Monday is the delivery day for SHFE 1302 copper contracts, Shanghai spot copper offers will turn to premiums of RMB 0-120/mt versus SHFE 1302 copper contracts.