SHANGHAI, Feb. 20 (SMM) – Plunging Chinese stock markets depressed market sentiment on Tuesday. Besides, investors speculated that the Chinese government may launch more curbs to cool rising property prices in major cities, the first increase since late 2011. Concerns surrounding top consumer China's base metals demand from the housing sector weighed on copper prices, which extended the previous trading day's declines amid sluggish speculative activities. Meanwhile, the NAHB Housing Market Index for February saw a decline for the first time in ten months, and the index was also softer than economists' anticipation. However, US equity markets increased across the board due to a surge in merger activity, with the Standard & Poor's 500 Index hitting a fresh 5-year high again. Moreover, the German investor sentiment also soared to its highest level in nearly three years in February and helped European stock markets close 1.1% up. In this context, the euro rebounded slightly but can only help limit downside room in copper prices. LME copper neglected rebounding US equity markets and continued falling, with prices testing USD 8,038/mt. Market sentiment and the capital front will guide base metals price directions following the Chinese New Year holiday. In other news, the proportion of cancelled warrants to total LME copper stocks slipped below 7%, an indication of weak fundamentals side.
European new car registrations fell to the lowest in January since its records began in 1990, which will depress base metals demand outlook somehow. But LME copper prices will likely make corrections following two-day losses and are expected to move between USD 8,030-8,080/mt during Wednesday's Asian trading hours. Chinese stock markets will extend declines. SHFE copper prices will fluctuate near current levels after opening down, and SHFE 1305 copper contract will hover in the RMB 58,200-58,700/mt range. Shanghai spot copper discounts are estimated between RMB 150-280/mt versus SHFE 1303 copper contract.