SMM Copper Market Morning Review (2013-11-18)

SHANGHAI, Nov. 18 (SMM) – The Chinese government plans to relax control over foreign investment in many sectors and allow prices of natural resources to reflect market demand in a more direct way, boosting market sentiment. Mixed US economic data triggered anticipation that the US Federal Reserve (Fed) may keep QE3 in place. Meanwhile, Janet Yellen hinted during the confirmation hearing that the Fed is in no rush to bring bond-buying program to an end, driving a small retreat in the US dollar. A weaker greenback helped commodity prices rebound and US shares extend gains. Three-month copper on the London Metal Exchange staged a rally and closed last Friday USD 17/mt higher at USD 7,010/mt. Copper inventories on the LME, COMEX and SHFE have dropped by one third since June 24 to the lowest level since early February, which may help stem losses in copper prices.      

US economic indicators released last Friday came in disappointing. Manufacturing activities in New York contracted unexpectedly by 2.21 in November, the first negative reading since May. Industrial production slipped 0.1% MoM in October, the first month-on-month decline since July. Wholesale inventories climbed 0.4% from a month ago in September, flat with expectations. Export prices slid 0.5% MoM in October, a reflection of weak demand from Europe, its major trade partner.
  
The euro zone’s CPI rose 0.7% in October from a year earlier, compared with a 1.3% growth in September. It marks the lowest level since November 2009.  

The US dollar index lost 0.18%, while the euro gained 0.25% against the greenback. Global stock markets generally closed up. All LME base metals ended with gains, except lead and tin. 

LME copper is expected to move in a tight range of USD 6,980-7,080/mt during Monday’s Asian trading hours. The Shanghai Composite Index will inch up. SHFE 1402 copper contract may shift to the most active contract today and fluctuate between RMB 50,200-50,700/mt. In spot markets, cargo holders will hold offers firm, with a premium of RMB 0-100/mt expected over SHFE 1312 copper contract – the new current-month contract.