SMM Copper Market Morning Review (2013-6-5)-Shanghai Metals Market

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SMM Copper Market Morning Review (2013-6-5)

Price Review & Forecast 09:43:40AM Jun 05, 2013 Source:SMM

SHANGHAI, Jun. 5 (SMM) – One of the world’s largest copper mine remains closed, raising expectations of falling copper supply and lifting LME copper prices. Positive Spanish economic data pushed European shares up 0.3%, appeasing market worries. On the other hand, economists of Goldman Sachs and Deutsche Bank predicted yesterday that the US Federal Reserve will begin to taper off monthly asset buying program from this September, driving all US stocks into negative territory. However, LME copper still hit a high of USD 7,456/mt, and finally closed at USD 7,430/mt, climbing to above all moving averages. Nevertheless, any upside space should be limited as LME copper is approaching previous resistance level and as it is still uncertain whether or not the State Reserve of Bureau will purchase copper in the near term.   

The market lacked macroeconomic news overnight, with the market continuing to absorb supports to base metals from decreasing copper ore supply from Indonesian Grasberg copper mine. US trade deficit expanded to USD 40.3 billion but was better than forecasts. Kansas Fed Chairman George appealed the US Federal Reserve to wind down assets purchasing, and pointed out that debit balances in security margin accounts at broker-dealers hit a record high in April, increasing expectations that the Fed will curtail assets purchasing plan. Some capital flowed out of the US stock markets, weighing down base metal prices.

Eurozone April PPI dropped for two consecutive months by 0.6%, and the largest decline since July 2009, with the annual rate down for the first time since February 2010 by 0.2%. Data show euro zone CPI will likely continue to rise in the next few months so that European central bank may further loosen its monetary policy.

Shinzo Abe appeals investments from Japanese endowment insurance funds in the stock market should be increased, boosting the Nikkei Index to soar by 2.05%. Japanese Prime Minister Shinzo Abe will announce government economic strategy today.

National Energy Administration Electric Power Department Deputy Director Hao Weiping reported China’s power consumption in May was 405.1 billion KWH, up 4.8% YoY, with the growth higher than the previous month but still a low in recent years, indicating China’s economic recovery is still modest.

The US dollar index fluctuated below 83, up 0.12%; US stocks markets fell across the board, with the euro against the US dollar up 0.03%; Asian stocks markets were mixed. LME base metals prices closed with gains except for tin.

US will release its ADP job data, and the market will remain cautious ahead of the data, restraining metal price increases. Shanghai base metals prices are expected to open high but move lower today.

Investors are now eyeing US economic data due tonight, so LME copper may encounter resistance at the upside, with prices expected between USD 7,370-7,450/mt during the Asian trading session on Wednesday. The Shanghai Composite Index will extend losses. SHFE 1309 copper contract will fall back to RMB 53,000-53,700/mt after opening higher. In spot market, cargo holders will rush to sell at highs. Abundant supply will cause spot premium to narrow to RMB 50-150/mt over SHFE 1306 copper contract prices. 
 

SMM Copper Market Morning Review (2013-6-5)

Price Review & Forecast 09:43:40AM Jun 05, 2013 Source:SMM

SHANGHAI, Jun. 5 (SMM) – One of the world’s largest copper mine remains closed, raising expectations of falling copper supply and lifting LME copper prices. Positive Spanish economic data pushed European shares up 0.3%, appeasing market worries. On the other hand, economists of Goldman Sachs and Deutsche Bank predicted yesterday that the US Federal Reserve will begin to taper off monthly asset buying program from this September, driving all US stocks into negative territory. However, LME copper still hit a high of USD 7,456/mt, and finally closed at USD 7,430/mt, climbing to above all moving averages. Nevertheless, any upside space should be limited as LME copper is approaching previous resistance level and as it is still uncertain whether or not the State Reserve of Bureau will purchase copper in the near term.   

The market lacked macroeconomic news overnight, with the market continuing to absorb supports to base metals from decreasing copper ore supply from Indonesian Grasberg copper mine. US trade deficit expanded to USD 40.3 billion but was better than forecasts. Kansas Fed Chairman George appealed the US Federal Reserve to wind down assets purchasing, and pointed out that debit balances in security margin accounts at broker-dealers hit a record high in April, increasing expectations that the Fed will curtail assets purchasing plan. Some capital flowed out of the US stock markets, weighing down base metal prices.

Eurozone April PPI dropped for two consecutive months by 0.6%, and the largest decline since July 2009, with the annual rate down for the first time since February 2010 by 0.2%. Data show euro zone CPI will likely continue to rise in the next few months so that European central bank may further loosen its monetary policy.

Shinzo Abe appeals investments from Japanese endowment insurance funds in the stock market should be increased, boosting the Nikkei Index to soar by 2.05%. Japanese Prime Minister Shinzo Abe will announce government economic strategy today.

National Energy Administration Electric Power Department Deputy Director Hao Weiping reported China’s power consumption in May was 405.1 billion KWH, up 4.8% YoY, with the growth higher than the previous month but still a low in recent years, indicating China’s economic recovery is still modest.

The US dollar index fluctuated below 83, up 0.12%; US stocks markets fell across the board, with the euro against the US dollar up 0.03%; Asian stocks markets were mixed. LME base metals prices closed with gains except for tin.

US will release its ADP job data, and the market will remain cautious ahead of the data, restraining metal price increases. Shanghai base metals prices are expected to open high but move lower today.

Investors are now eyeing US economic data due tonight, so LME copper may encounter resistance at the upside, with prices expected between USD 7,370-7,450/mt during the Asian trading session on Wednesday. The Shanghai Composite Index will extend losses. SHFE 1309 copper contract will fall back to RMB 53,000-53,700/mt after opening higher. In spot market, cargo holders will rush to sell at highs. Abundant supply will cause spot premium to narrow to RMB 50-150/mt over SHFE 1306 copper contract prices.