SMM Copper Weekly Price Review and Forecast (17-21 Jun. 2013)

SHANGHAI, Jun. 7 (SMM) – Overseas markets were dominated by short momentum during the Dragon Boat Festival in China. US May non-farm employment figures was better than forecasts, while May unemployment rate rose to 7.6%, causing concerns over US economic growth and that the US Federal Reserve will scale back debt purchasing. China Customs reported China's YTD unwrought copper and copper semis imports through May decreased significantly YoY, and the NBS released May PPI slid YoY and fell short of expectations. The World Bank lowered its outlook for global economic growth, down from 2.4% expectations in January, weighing down the market. US stocks fell before rising, and the US dollar index tumbled below 81, but failed to boost commodity markets. Meanwhile, slumping Asian stocks also distress market sentiment. LME copper prices continued to fall, dipping to USD 7,011/mt at the end of the week, or a drop of 1.5%. Total positions increased by 8,000 lots.

SHFE copper prices continued to drop along with China's stocks markets, dipping to RMB 51,250/mt, with weekly declines in excess of 3%. Total positions increased by nearly 60,000 lots.

In the spot market, the price spread between SHFE 1306 and SHFE 1307 copper contract expanded to RMB 400/mt. As the SHFE/LME copper price ratio jumped, cargo holders lowered premiums to move goods, leading to ample supply in the market. Speculators entered the market later in the week as spot premiums continued to fall, shifting to discounts, while downstream buyers purchased at lower prices, causing transactions to improve.