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SMM Copper Market Morning Review (2013-7-19)
Jul 19,2013 10:23CST
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Initial jobless claims in the US hit a two-month low last week.

SHANGHAI, Jul. 19 (SMM) – Initial jobless claims in the US hit a two-month low last week. Philadelphia Fed manufacturing index in July hit the highest since March 2011, highlighting US economic growth and presaging bright outlook for metal demand. Earnings of Morgan Stanley and UnitedHealth beat forecasts. Against this backdrop, Dow Jones and S&P 500 index hit new record high. US crude oil prices rallied to a 16-month high. LME copper rose as a result. Nevertheless, positive economic indicators also pushed the US dollar index higher, reining in gains of LME copper. LME copper closed at USD 6,909/mt, up USD 10/mt.     

US Labor Department announced July 18 that the number of initial jobless claims for the week decreased by 24,000, to 334,000, lower than the 345,000 expected, and employment data also improved significantly. Besides, Federal Reserve Bank of Philadelphia’s manufacturing index in July was also much better than expectations, hitting 19.8, its largest growth since 2003. US manufacturing is recovering rapidly, and is expected to be a major force boosting US economic growth and job market. In this context, the US dollar index was pushed up, while non-US dollar currencies generally dropped. But US Conference Board leading indicator was 0.0%, lower than the 0.3% expected, and recent consumption data also shows US consumption growth is slowing, which caused many investment banks to lower US GDP growth expectations significantly.

The survey results released by the Bruges Group showed that 71% of respondents supported UK membership of EFTA. Most English hope to exit EU because 60% supervision and GBP 3 billion will be saved. UK can also negotiate with countries outside EU on free trade agreement. German Finance Minister Wolfgang Schaeuble expressed Greece should stop lobbying regarding its debt restructuring. News from euro zone did not affect the market significantly.

The NBS shows home prices in 68 of 70 large and medium-sized Chinese cities rose in June YoY, and prices in only two cities fell. The largest YoY growth in June was 14.1%, and increases in 11 were smaller than May.

LME base metals prices rose across the board; LIFFE gold and silver prices rose by 0.68% and 0.42%, respectively. Standard & Poor’s 500 Index, the Dow Jones Industrial Average and Nasdaq Composite Index continued to hit record highs. Germany’s June PPI is expected to fall, while annualized PPI will rise.

Moody's revised US credit rating up, alleviating market bearish sentiment. LME copper will move within USD 6,860-6,940/mt during Friday’s Asian session. China’s A-shares will fall back, and SHFE 1311 copper contract will vacillate between RMB 49,400-50,000/mt after a high opening. In spot market, rising SHFE copper will allow cargo holders to hold prices firm. Downstream restocking ahead of the weekend will also lend support to copper prices. Spot premium of RMB 120-280/mt is expected over SHFE 1308 copper contract prices. 

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