SMM Copper Market Morning Review (2013-3-14)

SHANGHAI, Mar. 14 (SMM) – On Wednesday, the US reported that retail sales surged 1.1% in February, higher than market forecast, helping the Dow Jones Industrial Average close up for nine consecutive days and see historical high settlement price. However, the favorable US data also pushed the US dollar breaking through resistance at 83 and weighed on commodity markets, which offset the positive impact. Furthermore, the Eurostat announced that the euro zone's industrial production slipped by 0.4% YoY in January, larger than a decline of 0.1% anticipated by economists. Meanwhile, Italian borrowing cost rose, which sent Italian stock markets down by 1.7% and also gave pressures to copper markets. LME copper prices thus tested a trough at USD 7,768/mt before ending USD 40/mt lower at USD 7,790/mt. LME copper positions increased sharply by 5,606 lots the same day. With more severe struggle between long and short investors, copper prices will likely fluctuate within their previous trading range over the short term.

As market worries over the European debt crisis are escalating, bullish sentiment should be dented. As such, SMM believes that LME copper prices will continue to fluctuate between USD 7,760-7,850/mt during Thursday's Asian trading session. Chinese A-share market will stop falling. SHFE copper prices will hover at lows after opening down, giving back some of the previous day's gains. SHFE 1306 copper contract prices will move in the RMB 56,600-57,000/mt range. Shanghai spot copper premiums are anticipated between RMB 0-100/mt versus SHFE 1303 copper contract.