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SMM Copper Market Morning Review (2013-7-26)
Jul 26,2013 09:49CST
price review forecast
LME copper tumbled to USD 6,942/mt on Thursday due to downbeat China’s manufacturing July PMI.

SHANGHAI, Jul. 26 (SMM) – LME copper tumbled to USD 6,942/mt on Thursday due to downbeat China’s manufacturing July PMI. However, LME copper recovered some earlier losses as US durable goods orders in June rose more than expected. Greece has met requirement for the next tranche of bailout funds, pushing the euro up. This also provided upward momentum to LME copper. LME copper closed at USD 7,010/mt, down a mere USD 6/mt.

US economic data released overnight were mixed. Durable goods orders rose more than expected by 4.2% in June, but initial jobless claims in the week ending July 20 were worse than expected. Goldman Sachs cut its forecast for US Q2 GDP growth following these figures, weighing LME base metals prices down. However, Hilsenrath said in an article that the US Federal Reserve (Fed) may keep current bond-buying program in place during the July meeting. This raised expectations that the Fed will maintain QE3 for the immediate term, helping base metals rally. 

European economic indicators were also mixed. The UK Q2 GDP grew 0.6%, the biggest growth since the first quarter of 2011. Nevertheless, this also lowered the possibility of further loose monetary policy by the Bank of England. The GBP suffered selloff following the data and fell sharply against the US dollar. Germany’s IFO Business Confidence Index rose in July, but IFO business expectations weakened slightly to 102.4. This aggravated worries that the country’s economy may slip into recession again, but also increased the possibility of further easing monetary policy by the European Central Bank.

In China, funds outstanding for foreign exchange pointed to negative growth in June. Cloudy monetary policy is jittering investors. Markets are now expecting the People’s Bank of China (PBOC) to launch reverse repurchase now that the PBOC has not launched repurchase for six consecutive months.  

The US dollar index lost 0.6%. US stock markets rose, while European stocks generally fell. Asian shares mostly closed with declines. LME base metals prices ended in negative territory except lead

Mixed US economic data will keep investors cautious. LME copper will within USD 6,970-7,060/mt during Friday’s Asian session. China’s A-shares will inch up, and SHFE 1311 copper contract will vacillate between RMB 50,200-50,700/mt, with price declines expected in the afternoon session. In spot market, cargo holders will hold offers not as firm as before now that delivery of copper signed on a long-term basis has been completed. Spot premium of RMB 80-250/mt is expected over SHFE 1308 copper contract prices. 

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