SMM Copper Market Morning Review (2013-11-7)

SHANGHAI, Nov. 7 (SMM) – Three-month copper on the London Metal Exchange retreated from USD 7,100/mt during Wednesday’s European session, ending the day down USD 41/mt at USD 7,122/mt.

Research papers by top US Federal Reserve (Fed) officials call for the Fed to lower the unemployment threshold at which it will begin hiking interest rates, sending the US dollar index down 0.29%. A softer US dollar fuelled a rally in gold and crude oil prices. However, US stock markets were mixed, with the Dow Jones hitting fresh highs.
 
Markit’s composite PMI for the euro zone dipped to 51.9 in October from 52.2 in September. On the other hand, Germany’s factory orders jumped by 11.0% in September, triggering speculation that the European Central Bank (ECB) will decide not to cut interest rate during Thursday’s policy meeting. This helped the euro gain 0.39% against the US dollar. Industrial production in the UK grew at an annual rate of 2.2% in September, far better the expected, a sign of solid recovery in the British economy.    

London gold and silver closed up 0.48% and 0.5%, respectively. LME base metals closed with losses across the board.

LME copper is expected to move within USD 7,080-7,150/mt during Thursday’s Asian trading hours. Chinese A-share will face downward risks. SHFE 1401 copper contract, the most active one, will fluctuate between RMB 50,800-51,600/mt after a low opening. In spot markets, abundant supply will leave spot copper at a contango of RMB 0-80/mt and a backwardation of RMB 0-20/mt over SHFE 1311 copper contract.