SHANGHAI, Mar. 6 (SMM) – On Tuesday, Premier Wen Jiabao said when giving the Report on the Work of the Government that China aims to expand its economy by 7.5% in 2013, boosting market expectation on strong Chinese copper demand. In response, copper prices rebounded. In the evening, the US announced that the services sector accelerated at its fastest pace in a year in February, helped by a pick-up in new orders and demand for exports. This also heightened market optimism towards copper markets as the US dollar index dropped for a second straight trading day. Meanwhile, US equity markets also rebounded further on slow recovery in the US and the Fed's loose monetary policy, with the Dow Jones Industrial Average touching a high of 14,286.37, a fresh historical high. The Standard & Poor's 500 Index also saw a high settlement price, which was merely 25 points lower than the highest level. The euro zone's retail sales also came in better than expected and pushed European stock markets 1.8% higher to a fresh high in four and a half years. Nevertheless, LME copper price gains were still kept in check ahead of the release of the US non-farm payroll report for February, and since investors awaited central banks' monetary policy meetings. Hence, LME copper prices fluctuated between USD 7,750-7,800/mt, and closed USD 35/mt higher at USD 7,775/mt. LME copper stocks increased sharply by 10,575 mt to over 470,000 mt.
Favorable economic figures will continue buoy market sentiment, but market activity should remain cautious prior to the US employment data. As such, SMM believes that LME copper prices will move between USD 7,750-7,830/mt during Wednesday's Asian trading hours. SHFE copper prices will fluctuate at highs after starting flat, and SHFE 1306 copper contract will hover in a range of RMB 56,600-57,200/mt. Shanghai spot copper discounts are estimated between RMB 60-160/mt versus SHFE 1303 copper contract.