SHANGHAI, Oct. 15 (SMM) – Markets continued to digest Chinese economic data on Monday. Despite disappointing Chinese export data, the country’s import data were surprisingly pleasant, sparking anticipation over improving demand in the world’s top metal consumer and rising base metals prices. China’s imports of copper and copper products hit 457,847 mt in September, up 16% YoY and 18% MoM, the highest level since last March. US partial government shutdown entered its 14th day and debt ceiling deadline is looming large, but the White House and the Congress remains deeply divided over budget talks. However, most investors still cling to the hope that a last-minute deal will be reached. US stocks sustained a three-day winning streak. Market sentiment improved significantly, helping LME copper extend gains made during Asian trading session. The red metal closed yesterday up USD 57/mt at USD 7,257/mt.   

Although Senate Majority leader Harry Reid and Minority leader Addison Mitchell Mitch McConnell failed to reach a consensus last weekend, Harry Reid said the talks is of substantial significance and is optimistic that a deal will be reached. The Senate stated it was close to reaching a deal on Monday that will reopen the government and delay possible default by several months, though many obstacles still persist. The Senate has been the major contributor to the last-minute deal for US fiscal issues over the past five years, so optimism expressed by the Senate boosted market risk appetite, pushing US shares and commodity prices up. 

China’s economic indicators released Monday calmed frayed nerves. China’s CPI grew by 3.1% YoY in September, its highest level in seven months. But markets expect that higher inflation rate will not prompt the Chinese government to tighten its monetary policy. PPI slipped by 1.3% YoY, down at a slower pace. Power consumption in September rose by 10.4% from a year ago. New lending hit RMB 787 billion, beating expectations. 

European and US shares mostly closed up. All base metals on the London Metal Exchange, except aluminum and tin, ended in positive growth territory.

It was reported this morning that the Congress is close to striking a deal over budget issues, which will boost market sentiment. LME copper is expected to move within USD 7,220-7,280/mt during Tuesday’s Asian trading hours. The Shanghai Composite Index will extend gains. SHFE 1401 copper contract will fluctuate between RMB 52,000-52,700/mt after a high opening. Short sells may close positions once prices rise above RMB 52,500/mt. In spot markets, a contango of RMB 0-150/mt and a backwardation of RMB 0-50/mt are expected over SHFE 1310 copper contract.