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SMM Copper Market Morning Review (2013-11-14)
Nov 14,2013 09:45CST
price review forecast
Source:SMM
The communiqué after China's Third Plenum appealed for a cut in investment and granting farmers more property rights, with details still in the process of making.

SHANGHAI, Nov. 14 (SMM) – The communiqué after China's Third Plenum appealed for a cut in investment and granting farmers more property rights, with details still in the process of making. European and US investors bet that China’s economic reform plan will not suffice to boost the country’s economy, weighing on base metals. Worries remained that the US Federal Reserve may trim its accommodative monetary policy sooner than expected. Against this backdrop, three-month copper on the London Metal Exchange retreated from USD 7,000/mt to USD 6,956/mt, closing Wednesday more than 1.6% lower at USD 6,985/mt. The red metal is expected to fall further for the short term.  

Positive employment data in the UK released Wednesday appeased worries over deflation risks in the country. The number of people claiming jobless benefits in Britain dropped by 41,700 in October, with the unemployment rate falling to its lowest level since January 2009 at 3.9%, the Office for National Statistics announced. The country’s ILO unemployment rate slid to the lowest since April 2009 at 7.6%. These upbeat figures helped the pound rebound to 1.6 against the greenback. The Bank of England (BOE)’s inflation report for November revised forecast for GDP growth in Q4 up to 0.9% from 0.8% and raised projections for GDP growth in 2014 to 2.8% from 2.5%.

Industrial output in the euro zone for September grew 1.1% YoY, but slipped 0.5% MoM. The month-on-month decline was far worse than expectations, igniting concerns over sustainability of the region’s economic recovery.    

China reported RMB 1.21 trillion in fiscal revenues in October, up 16.2% or RMB 169.3 billion from a year ago. The growth in fiscal revenues was contributed chiefly by economic recovery and turnaround in trade.

European stock markets fell, while US shares hit new high. LME base metals rallied at the tail of the session, except copper.

Investors will increase short positions after LME copper lost USD 7,000/mt mark, which will drive LME copper down to USD 6,950-7,020/mt during Thursday’s Asian trading hours. SHFE 1401 copper contract, the most active one, will fluctuate between RMB 50,100-50,600/mt after a low opening. In spot markets, downstream producers will step in after copper prices fall below RMB 50,000/mt, with a premium of RMB 80-180/mt expected over SHFE 1311 copper contract.   

LME copper
SHFE copper

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