SMM Copper Market Morning Review (2013-4-12)

SHANGHAI, Apr. 12 (SMM) – LME copper inventories hit a 10-year high during early European session, fanning apprehension over an overhang of copper supply. This prompted some investors to sell off copper, driving LME copper down to USD 7,510/mt. Later, market sentiment improved. The yields of Italy’s 3-year government bonds recorded a one-month low, sending the euro to a six-week high and helping commodity prices rebound. The US Labor Department announced last night that the country’s initial jobless claims fell to seasonally adjusted 346,000 in the week ended April 6, a decrease of 42,000 and the biggest weekly decline since mid-November last year. This helped alleviate worries over disappointing US non-farm payrolls released earlier. In response, US stock markets closed up, with the Dow Jones and S&P 500 both hitting new highs again. LME copper reversed losses at the tail of trading and finally closed at USD 7,594/mt.   

Encouraging US economic indicators and softer US dollar will help LME copper fluctuate at high levels of USD 7,550-7,630/mt during the Asian trading hours on Friday. The Shanghai Composite Index will likely fall back into correction after absorbing rumor on RMB 7 trillion investment in infrastructure in China. SHFE 1308 copper contract prices should move within RMB 54,800-55,400/mt after starting the day slightly higher. In spot markets, cargo holders will be more anxious to sell for cash against widening price gap among SHFE copper contracts, with spot copper discounts expected between RMB 0-50/mt and premiums between RMB 0-50/mt against SHFE 1304 copper contract.