SMM Copper Market Morning Review (2013-7-15)

SHANGHAI, Jul. 15 (SMM) – Better-than-expected earnings reports by JPMorgan and Wells Fargo last Friday pushed S&P 500 and Dow Jones to fresh record high. However, the rally of the US dollar index put downward pressure on commodity prices. Selloff at highs deprived copper prices of upward momentum. The Fitch Ratings downgraded France’s credit rating from “AAA” to “AA+”, with a stable outlook. Lou Jiwei, China’s Finance Minister sparked apprehension over China’s economic growth by saying in a summit in Washington that there is no big problem with a growth rate of 7% or 6.5%. Meanwhile, investors are cautious ahead of Monday’s Chinese 2Q GDP. As a consequence, LME copper pulled back from high levels to USD 6,910/mt before finally closing at USD 6,953/mt, down 0.7%. 

University of Michigan's July CCI was 83.9, worse than 84.1 expected; Federal Reserve Bank of Philadelphia President Charles Plosser and St Louis Fed Chairman Bullard gave a speech. Charles Plosser expressed the US Federal Reserve (Fed) should begin to scale back bond purchasing in September, and quit bond purchasing at the end of the year, while Bullard believes the Fed needs more easing policies given sliding inflation data.
Fitch downgraded France's rating from AAA to AA+ as the country's economic recovery is worse than expected, and maintained its outlook steady because France will not negatively affect European debt crisis. This weighed down the euro.

China's economic data released last weekend including June power generation volume, M2 growth and newly-increased loans were not optimistic.

US stocks markets continued to rise while European stocks fell; LME base metals prices were mixed.

Market pessimism over China’s 2Q GDP will keep LME copper in check within a USD 6,870-6,970/mt price range during Monday’s Asian session. China’s A-shares will test support at the 20-day moving average. SHFE 1311 copper contract will move within RMB 49,300-50,200/mt after a low opening. In spot market, the price gap between SHFE 1307 and 1308 copper contracts will remain over RMB 200/mt as SHFE 1308 copper contract will switch to the new current-month contract tomorrow. Cargo holders will be eager to move goods to raise cash. Spot discount of RMB 0-100/mt is expected over SHFE 1307 copper contract prices.