SMM Copper Market Morning Review (2013-10-29)

SHANGHAI, Oct. 29 (SMM) – US economic indicators announced on Monday were mixed. Market attention has shifted onto the US Federal Reserve’s policy meeting due to be held on Wednesday. Most believe chances are slim that the Fed will announce taper-off of its current USD 85 billion-per-month bond-buying program given the weak economic data. China’s metal imports and manufacturing PMI cheered investors up. However, markets are worried that tightening liquidity may contain China’s economic growth and erode demand for base metals after the country’s short-term lending rate hit its highest level since July. This tempered gains of base metals overnight. LME copper rose, but surrendered gains in late-trade hours, closing Monday at USD 7,178/mt. 

US industrial output rose 0.6% MoM in September, capping forecasts and hitting a 7-month high. However, growth in manufacturing production was way below the 0.5% growth in August as automobile output slowed a bit. Capacity utilization rate advanced to 78.3%, the highest since July 2008. Pending home sales in the US slid 5.6% MoM in September, the National Association of Realtors (NAR) announced. This marks a fourth straight month of decline and the lowest level since last December, as well as the biggest month-on-month decline in 40 months.

The US dollar index gained 0.16%. Global shares mostly fell. All base metals on the London Metal Exchange rose, except copper.

LME copper is expected to move in a USD 7,160-7,220/mt range during Tuesday’s Asian trading hours. The Shanghai Composite Index will consolidate. SHFE 1401 copper contract, the most active one, will fluctuate between RMB 51,400-51,800/mt. In spot markets, a contango of RMB 0-120/mt is expected over SHFE 1311 copper contract.