SMM Copper Market Morning Review (2013-4-16)-Shanghai Metals Market

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SMM Copper Market Morning Review (2013-4-16)

Price Review & Forecast 09:54:51AM Apr 16, 2013 Source:SMM

SHANGHAI, Apr. 16 (SMM) – LME copper market was dominated by sell-off overnight. The US announced last night that New York manufacturing index for April continued to drop and that home builder confidence index in April fell to the lowest in six months. These negative data weighted down commodity prices and sent US stock market plunging, with the S&P 500 plummeting 2.3%, its biggest decline so far this year. June gold sank 9.3% to settle at USD 1,361.10/oz on the COMEX division of the New York Mercantile Exchange - the biggest one-day percentage drop since February 1983. Forecast-missing economic growth of China triggered worries over demand, causing some investors to sell LME copper to make up losses in gold markets. As such, LME copper hit a low of USD 7,085/mt, and finally closed down over 2% at USD 7,280/mt.   

The National Bureau of Statistics announced yesterday that China’s Q1 GDP was RMB 11.89 trillion, down from the previous quarter’s RMB 16.58 billion. Its annualized growth slowed to 7.7%, lower than the forecast of 8.0%. Chin’s GDP stabilized in Q4 2012 following a seventh straight quarter’s decline, but again slowed down in Q1 2013. Industrial value added at large industrial enterprises rose 9.5% YoY in Q1, but the growth was down 2.1 percentage points from the same period last year. Retail sales of consumer goods totaled RMB 5.55 trillion, with nominal growth at 12.4% YoY, against real growth of 10.8% YoY (excluding price factor). These figures indicate that the Chinese economy is recovering slowly, unfavorable for commodity markets.   

Imports of the euro zone declined in February from January, its exports posted slight growth, suggesting economic rebound in the region will be constrained by sluggish demand both internally and externally. 

International capital net inflows in the US totaled USD 53.6 billion in February, down from the previous month. New York Fed manufacturing index dropped to 3.05% in April, falling far short of expectations mainly because of sharp declines in new orders. This is a sign the US economy lost some steam from Q2. Besides, Nasdaq, S&P 500 and Dow Jones all fell sharply.

Copper market will be dominated by shorts. LME copper should move within USD 7,100-7,250/mt during the Asian trading hours on Tuesday. A plunging Shanghai Composite Index will cause SHFE 1308 copper contract to extend losses after a low opening, with prices between RMB 51,800-52,500/mt. In spot markets, cargo holders will hold quotations firm now that SHFE 1305 copper contracts have become the new current-month contract. Downstream producers will increase purchases at their desired price. Spot copper premiums are expected between RMB 100-200/mt against SHFE 1305 copper contract. 
 

SMM Copper Market Morning Review (2013-4-16)

Price Review & Forecast 09:54:51AM Apr 16, 2013 Source:SMM

SHANGHAI, Apr. 16 (SMM) – LME copper market was dominated by sell-off overnight. The US announced last night that New York manufacturing index for April continued to drop and that home builder confidence index in April fell to the lowest in six months. These negative data weighted down commodity prices and sent US stock market plunging, with the S&P 500 plummeting 2.3%, its biggest decline so far this year. June gold sank 9.3% to settle at USD 1,361.10/oz on the COMEX division of the New York Mercantile Exchange - the biggest one-day percentage drop since February 1983. Forecast-missing economic growth of China triggered worries over demand, causing some investors to sell LME copper to make up losses in gold markets. As such, LME copper hit a low of USD 7,085/mt, and finally closed down over 2% at USD 7,280/mt.   

The National Bureau of Statistics announced yesterday that China’s Q1 GDP was RMB 11.89 trillion, down from the previous quarter’s RMB 16.58 billion. Its annualized growth slowed to 7.7%, lower than the forecast of 8.0%. Chin’s GDP stabilized in Q4 2012 following a seventh straight quarter’s decline, but again slowed down in Q1 2013. Industrial value added at large industrial enterprises rose 9.5% YoY in Q1, but the growth was down 2.1 percentage points from the same period last year. Retail sales of consumer goods totaled RMB 5.55 trillion, with nominal growth at 12.4% YoY, against real growth of 10.8% YoY (excluding price factor). These figures indicate that the Chinese economy is recovering slowly, unfavorable for commodity markets.   

Imports of the euro zone declined in February from January, its exports posted slight growth, suggesting economic rebound in the region will be constrained by sluggish demand both internally and externally. 

International capital net inflows in the US totaled USD 53.6 billion in February, down from the previous month. New York Fed manufacturing index dropped to 3.05% in April, falling far short of expectations mainly because of sharp declines in new orders. This is a sign the US economy lost some steam from Q2. Besides, Nasdaq, S&P 500 and Dow Jones all fell sharply.

Copper market will be dominated by shorts. LME copper should move within USD 7,100-7,250/mt during the Asian trading hours on Tuesday. A plunging Shanghai Composite Index will cause SHFE 1308 copper contract to extend losses after a low opening, with prices between RMB 51,800-52,500/mt. In spot markets, cargo holders will hold quotations firm now that SHFE 1305 copper contracts have become the new current-month contract. Downstream producers will increase purchases at their desired price. Spot copper premiums are expected between RMB 100-200/mt against SHFE 1305 copper contract.