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SMM Copper Market Morning Review (2013-7-24)
Jul 24,2013 09:52CST
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Richmond Manufacturing Index fell unexpectedly in July to -11, the lowest since February.

SHANGHAI, Jul. 24 (SMM) – Richmond Manufacturing Index fell unexpectedly in July to -11, the lowest since February. This sent the US dollar index down to a new low in more than one month at 81.926. The euro zone’s Consumer Confidence Index improved significantly in July. As such, base metals prices rose across the board during the European session. LME copper staged a strong rally and closed at USD 7,048/mt, up USD 38/mt. However, markets remain cautious ahead of the release of China’s July manufacturing PMI. The rise in copper prices is largely due to a weaker US dollar. Any potential towards a further rise in copper prices should be limited due to a lack of buying.  

US Home Price Index rose less than expected by 0.7% in May, compared with April's downwardly revised 0.5% growth. Richmond Manufacturing Index fell unexpectedly in July to -11. Downbeat figures caused the US dollar index to drop for a third straight day, lending support to base metals prices.

Chinese Premier Li Keqiang again underscored pro-growth policy during his tour to Guangxi. He said efforts should be made to step up investment in railway construction so as to promote social financing. Investment and Financing System Reform in Railway Sector will be forwarded to the State Council before September and will likely be implemented at the end of this year. China Railway Corporation issued RMB 20 billion worth of 10-year railway bonds yesterday, with bid interest rate at 4.15%-5.15%. This boosted base metals prices and China’s stock market. It was reported that Premier Li Keqiang said the Chinese government will not tolerate a less than 7% economic growth, alleviating worries over a steep downshift in the Chinese economy.      

The US dollar index lost 0.27%, while the euro gained 0.29% against the US dollar, a new one-month high. US stock markets were mixed, with Dow Jones hitting a new record high. European stocks closed with losses. Asian shares generally closed up. LME base metals prices rose across the board.

Markets are cautious ahead of the release of HSBC’s flash China July manufacturing PMI. LME copper will encounter resistance at the 60-day moving average, with prices expected between USD 6,970-7,060/mt during Wednesday’s Asian session. China’s A-shares will continue to rise, and SHFE 1311 copper contract will move within RMB 50,200-51,000/mt after a high opening. In spot market, rising SHFE copper will allow cargo holders to demand higher prices. The price gap between different categories of copper will remain large. Spot premium of RMB 180-400/mt is expected over SHFE 1308 copper contract prices. 

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