SMM Copper Market Morning Review (2013-6-19)-Shanghai Metals Market

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SMM Copper Market Morning Review (2013-6-19)

Price Review & Forecast 09:51:51AM Jun 19, 2013 Source:SMM

SHANGHAI, Jun. 19 (SMM) – Investors are worried that the US Federal Reserve will begin to wind down bong-buying program. US housing starts in May fell short of forecasts and month-on-month growth of May CPI also missed expectations, causing commodity prices to fall, with London gold down 1.2%. LME copper fell below USD 7,000/mt to USD 6,965/mt before finally closing at USD 6,990/mt, down 1.4%. 

US Commerce Department reported June 18 that US housing starts in May increased by 914,000 units, with the largest growth in multi-family home starts, but increases were still below expectations. US May construction permits were 974,000 units, compared to the forecast of 975,000, and 1.005 million units in April, with a drop of 3.1% in May and an increase of 12.9% in April. US Commerce Department also showed that US May CPI only rose slightly from the previous month, implying US inflationary pressure is modest while global economic growth and US salary increases slow. As ICSC/Goldman Sachs Chain Store Sales for the week ending June 15 was up 0.3% from the previous week, US economic recovery is expected to continue in the short term.

Germany's ZEW economic sentiment index in June rose to 38.5, with the growth better than expectations, and ZEW June economic sentiment index climbed to 30.6, compared to 27.6 in the previous month. German ZEW President Clemens Fuest stated Germany's economy will grow faster in 2H 2013, with major driving force of private consumption, positive job situations and salary growth. Besides, G8 prompted euro zone countries to build a bank union at the meeting in Northern Ireland, which will positively affect the market in the near term.

State Administration of Foreign Exchange (SAFE) revised current account surplus in Q1 to USD 47.6 billion on June 18, compared to the initial USD 55.2 billion, and revised capital and financial account surplus in Q1 to USD 90.1 billion, compared to the initial USD 101.8 billion. Besides, hot money began to flow out of China, and foreign exchange receipts continued to decrease. Although China can ease liquidity tightness by reverse repurchasing and Short-term Liquidity Operations, market expectations that China will lower deposit reserve ratio increase.

LME base metals prices mostly dropped, with copper prices falling by 1.37%; the US dollar index rose by 0.08%; LIFFE gold prices fell by 1.25%. The Dow Jones Industrial Average rose by 0.91%.
 

LME copper will move between USD 6,970-7,050/mt during the Asian trading session on Wednesday. The Shanghai Composite Index will face downward correction on rumors of IPO restart. SHFE 1310 copper contract will fluctuate in the range of RMB 50,500-51,200/mt after a low opening. In spot market, suppliers of imported copper will remain eager to sell for cash as liquidity crunch bit in at the end of 1H. Spot premium of RMB 120-220/mt is expected over SHFE 1307 copper contract prices. 
 

SMM Copper Market Morning Review (2013-6-19)

Price Review & Forecast 09:51:51AM Jun 19, 2013 Source:SMM

SHANGHAI, Jun. 19 (SMM) – Investors are worried that the US Federal Reserve will begin to wind down bong-buying program. US housing starts in May fell short of forecasts and month-on-month growth of May CPI also missed expectations, causing commodity prices to fall, with London gold down 1.2%. LME copper fell below USD 7,000/mt to USD 6,965/mt before finally closing at USD 6,990/mt, down 1.4%. 

US Commerce Department reported June 18 that US housing starts in May increased by 914,000 units, with the largest growth in multi-family home starts, but increases were still below expectations. US May construction permits were 974,000 units, compared to the forecast of 975,000, and 1.005 million units in April, with a drop of 3.1% in May and an increase of 12.9% in April. US Commerce Department also showed that US May CPI only rose slightly from the previous month, implying US inflationary pressure is modest while global economic growth and US salary increases slow. As ICSC/Goldman Sachs Chain Store Sales for the week ending June 15 was up 0.3% from the previous week, US economic recovery is expected to continue in the short term.

Germany's ZEW economic sentiment index in June rose to 38.5, with the growth better than expectations, and ZEW June economic sentiment index climbed to 30.6, compared to 27.6 in the previous month. German ZEW President Clemens Fuest stated Germany's economy will grow faster in 2H 2013, with major driving force of private consumption, positive job situations and salary growth. Besides, G8 prompted euro zone countries to build a bank union at the meeting in Northern Ireland, which will positively affect the market in the near term.

State Administration of Foreign Exchange (SAFE) revised current account surplus in Q1 to USD 47.6 billion on June 18, compared to the initial USD 55.2 billion, and revised capital and financial account surplus in Q1 to USD 90.1 billion, compared to the initial USD 101.8 billion. Besides, hot money began to flow out of China, and foreign exchange receipts continued to decrease. Although China can ease liquidity tightness by reverse repurchasing and Short-term Liquidity Operations, market expectations that China will lower deposit reserve ratio increase.

LME base metals prices mostly dropped, with copper prices falling by 1.37%; the US dollar index rose by 0.08%; LIFFE gold prices fell by 1.25%. The Dow Jones Industrial Average rose by 0.91%.
 

LME copper will move between USD 6,970-7,050/mt during the Asian trading session on Wednesday. The Shanghai Composite Index will face downward correction on rumors of IPO restart. SHFE 1310 copper contract will fluctuate in the range of RMB 50,500-51,200/mt after a low opening. In spot market, suppliers of imported copper will remain eager to sell for cash as liquidity crunch bit in at the end of 1H. Spot premium of RMB 120-220/mt is expected over SHFE 1307 copper contract prices.