SMM Copper Market Morning Review (2013-6-18)-Shanghai Metals Market

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SMM Copper Market Morning Review (2013-6-18)

Price Review & Forecast 10:45:59AM Jun 18, 2013 Source:SMM

SHANGHAI, Jun. 18 (SMM) –Investors are cautious ahead of the US Federal Reserve (Fed)’s policy meeting due June 18-19. An article from Financial Times says that Bernanke might hint tapering off QE3. New York Fed Manufacturing Index for June was 7.84, beating May’s -1.43 and the 0.50 expected. This pushed US shares up and partly offset price declines caused by strengthening US dollar and worries over demand in China. LME copper fell to USD 7,050/mt during the European session, and finally closed USD 4/mt lower at USD 7,087/mt.   

US negotiated with EU at the G8 summit June 17 on the free trade agreement, with the hope of creating thousands of jobs and pushing up economic growth in US and Europe. The official negotiation of free trade agreement will be commenced in Washington in July, which will last for 18 months. The move will give support to US economic recovery. New York Federal Reserve's June manufacturing PMI rose to 7.84, much higher than expectations. The National Association of Home Builders (NAHB) announced that US July housing market index rose to 52, showing market sentiment in the US property market improved. US May construction permits and housing starts data is expected to boost the market and commodity prices.

Bundesbank warned that German economic growth will slow in summer, despite exports, imports and output growth in April shows its economy will strengthen in Q2. Meanwhile, business confidence in May was also positive, and the building industry is also improving, so the Bundesbank's statement leaves room for additional easing policy.

The central parity of RMB against US dollar was 6.1598, up 9 basis points from the previous day, and hitting a record high for four consecutive days since June 7 from the foreign exchange rate reform. But State Administration of Foreign Exchange released the surplus of foreign exchange settlements and sales by banks on behalf of clients were USD 17.2 billion in May, only half of April levels. The RMB continued to appreciate, but attraction to hot money is weakening, when combined with sliding profits of real economies, China's central bank is facing increasing regulation pressure.

LME base metals prices closed with declines except for zinc; the US dollar index slid by 0.03%; the Dow Jones Industrial Average rose by 0.73%; LIFFE gold prices fell by 0.41%.

LME copper opened higher this morning and moved higher due to a weaker US dollar, but any upward momentum should be limited, with prices expected between USD 7,080-7,150/mt during the Asian trading session on Tuesday. The Shanghai Composite Index will extend losses, while SHFE 1310 copper contract will fluctuate in the range of RMB 51,300-51,800/mt after a low opening. In spot market, cargo holders will hold offers firm now that SHFE 1307 copper contracts will become the new current-month contract today. Downstream producers will purchase to need at low prices. Spot premium of RMB 50-150/mt is expected over SHFE 1307 copper contract prices. 
 

SMM Copper Market Morning Review (2013-6-18)

Price Review & Forecast 10:45:59AM Jun 18, 2013 Source:SMM

SHANGHAI, Jun. 18 (SMM) –Investors are cautious ahead of the US Federal Reserve (Fed)’s policy meeting due June 18-19. An article from Financial Times says that Bernanke might hint tapering off QE3. New York Fed Manufacturing Index for June was 7.84, beating May’s -1.43 and the 0.50 expected. This pushed US shares up and partly offset price declines caused by strengthening US dollar and worries over demand in China. LME copper fell to USD 7,050/mt during the European session, and finally closed USD 4/mt lower at USD 7,087/mt.   

US negotiated with EU at the G8 summit June 17 on the free trade agreement, with the hope of creating thousands of jobs and pushing up economic growth in US and Europe. The official negotiation of free trade agreement will be commenced in Washington in July, which will last for 18 months. The move will give support to US economic recovery. New York Federal Reserve's June manufacturing PMI rose to 7.84, much higher than expectations. The National Association of Home Builders (NAHB) announced that US July housing market index rose to 52, showing market sentiment in the US property market improved. US May construction permits and housing starts data is expected to boost the market and commodity prices.

Bundesbank warned that German economic growth will slow in summer, despite exports, imports and output growth in April shows its economy will strengthen in Q2. Meanwhile, business confidence in May was also positive, and the building industry is also improving, so the Bundesbank's statement leaves room for additional easing policy.

The central parity of RMB against US dollar was 6.1598, up 9 basis points from the previous day, and hitting a record high for four consecutive days since June 7 from the foreign exchange rate reform. But State Administration of Foreign Exchange released the surplus of foreign exchange settlements and sales by banks on behalf of clients were USD 17.2 billion in May, only half of April levels. The RMB continued to appreciate, but attraction to hot money is weakening, when combined with sliding profits of real economies, China's central bank is facing increasing regulation pressure.

LME base metals prices closed with declines except for zinc; the US dollar index slid by 0.03%; the Dow Jones Industrial Average rose by 0.73%; LIFFE gold prices fell by 0.41%.

LME copper opened higher this morning and moved higher due to a weaker US dollar, but any upward momentum should be limited, with prices expected between USD 7,080-7,150/mt during the Asian trading session on Tuesday. The Shanghai Composite Index will extend losses, while SHFE 1310 copper contract will fluctuate in the range of RMB 51,300-51,800/mt after a low opening. In spot market, cargo holders will hold offers firm now that SHFE 1307 copper contracts will become the new current-month contract today. Downstream producers will purchase to need at low prices. Spot premium of RMB 50-150/mt is expected over SHFE 1307 copper contract prices.