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SMM Copper Market Morning Review (2013-11-27)
Nov 27,2013 09:56CST
price review forecast
Concerns over supply glut and sluggish trading activity ahead of the upcoming Thanksgiving Day weighed base metals prices down.

SHANGHAI, Nov. 27 (SMM) – Concerns over supply glut and sluggish trading activity ahead of the upcoming Thanksgiving Day weighed base metals prices down. Three-month copper on the London Metal Exchange slipped to USD 7,061/mt before ending Tuesday at USD 7,070/mt.

There was 21,000 mt of surplus refined copper languishing on the global market in August, the first supply surplus in four months, the International Copper Study Group (ICSG) reported. This exerted downward pressure on copper prices.

Chinese copper smelters are mulling over a more than 50% hike in term premiums for refined copper exports in 2014 to USD 120-138/mt after Codelco last week asked for a 41% rise in premium for shipments to China, sources said Tuesday. This may stimulate Chinese copper smelters to ramp up exports next year, but RMB appreciation will contain China’s copper exports.  

US economic indicators overnight came in mixed. Building permits grew to an annualized rate of 1.03 million units in October, the highest level since June 2008. The S&P/Case-Shiller home-price index grew 13.3% YoY in September, topping the 13% estimate and August’s 12.8%, a sign of strengthening housing market. Nevertheless, these encouraging data were followed by disappointing consumer confidence index, which slumped to a seven-month low of 70.4 in November. This suggests Americans are worried about salary and employment prospects, dragging base metals prices down.      

Administrative approval procedures for QDII and QFII qualification and quota will be cancelled "when conditions are ripe," Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said Tuesday. Reforms to accelerate convertibility of RMB under capital accounts and further liberalize interest rates, deposit rates in particular, are being considered, Zhou added. The PBOC is willing to buy more government bonds of the euro zone to help the region recover, said Zhou, strengthening the euro. 

Three out of nine members of the Bank of Japan (BOJ) disagreed with BOJ governor’s optimism over the country’s economy and prices, according to the minutes of the central bank’s October policy meeting.

US stock markets closed with gains, with the NASDAQ jumping above the 4,000 mark for the first time in 13 years, while European stocks plunged. LME base metals ended in negative growth territory, except lead.  

Thin trading activity before the Thanksgiving Day will hold LME copper in check within USD 7,050-7,090/mt during Wednesday’s Asian trading hours. The Shanghai Composite Index will edge lower. SHFE 1402 copper contract will fluctuate between RMB 50,500-50,800/mt after a low opening. In spot markets, a discount of RMB 0-30/mt and a premium of RMB 0-70/mt are expected over SHFE 1312 copper contracts.


LME copper
SHFE copper

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