SHANGHAI, Jul. 30 (SMM) –
Last week, LME copper prices moved higher. Economic reports released last week were mixed, with PMI in both Europe and the US down. European and US stocks markets continued to rebound, however, and the euro and commodity prices rose as the US dollar index fell sharply to 82. Stable political conditions in Japan helped push up the Nikkei Index and other Asian stock markets. China Customs reported refined copper imports in June hit a nine-month high, which helped ease market concerns over copper demand in China. LME copper prices rose to USD 7,120/mt, up from USD 6,950/mt, but strong resistance from the 60-day moving average kept LME copper prices closer to USD 7,000/mt.
A-shares on the Shanghai Composite Index rose initially, but later fell back to hover slightly above 2,000. SHFE copper prices rebounded and stood at RMB 50,000/mt, but still met resistance at RMB 50,800/mt. Total positions were down.
Copper prices are expected to fluctuate in a wide range this coming week. Recent US economic data was mixed, but US stock markets reflect a more optimistic view of the US economy. US non-farm employment figures will be released this week and are expected to give support to copper prices.
The latest euro zone PMI and manufacturing PMI both rose to two-year highs. PMI reports from many European countries were also upbeat, and euro zone manufacturing is expected to continue expanding through Q3. Greece's financial bailout problems should also be resolved soon, so any downward risk for the euro zone economy is waning, but the euro zone is still plagued by soft overseas demand, tight liquidity, and high unemployment rates. The euro slowed after rising for the past two weeks, which will weigh on copper prices.
Gold and crude oil prices met resistance at high levels. LME copper prices should challenge USD 7,100/mt, with the low-end of the price range at USD 6,900/mt.
China's central bank suspended open market operations last Thursday for a fifth straight week, so capital should remain relatively tight throughout 2H 2013. As the month ends, A-share and futures markets will be quiet, which will weigh on SHFE copper prices. Total positions should fall as SHFE copper prices rise toward RMB 50,800/mt.