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SMM Copper Market Morning Review (2014-3-5)
Mar 5,2014 10:04CST
price review forecast
LME copper prices climbed as high as USD 7,067/mt Tuesday, and closed at USD 7,049/mt, up USD 81/mt.

SHANGHAI, Mar. 5 (SMM) – Three major indices in the US stock market increased by over 1.4% Tuesday, with S&P 500 hitting new record high and Nasdaq also touching a 14-year high. High risk assets regained popularity among investors after geopolitical crisis in Ukraine eased. LME copper prices climbed as high as USD 7,067/mt and closed at USD 7,049/mt, up USD 81/mt, helped by shorts liquidating positions.

SHFE most active copper contract prices started at RMB 49,010/mt at Tuesday’s night session, and fluctuated up to RMB 49,440/mt before closing the session RMB 560/mt higher at RMB 49,370/mt. Traded volumes rose markedly during the night trading, but positions declined as shorts closed positions.

High risk assets rallied Tuesday as Ukraine tension eased. Russian President Vladimir Putin said Russia will only use force as “a last resort” in Ukraine, but will provide financial aid to the Crimea region and reserve the right to deploy Russia troops in the region. In response, S&P 500 index hit a record high, while gold and silver slumped.

The euro zone PPI fell 0.3% MoM and 1.4% YoY in January, worse than market forecasts. The index, which staged its biggest YoY decline since December 2009, reflected doubts on a euro zone recovery.

UK’s construction PMI for February dropped to 62.6, from January’s 64.6, lower than the 63 expected.

In China, the PBOC conducted RMB 35 billion of 14-day bond repurchases and RMB 50 billion of 28-day repurchases Tuesday. The central bank has never conducted 28-day repo operations since June 2013. However, money rates continued to fall, which was considered a result of sharp rise in forex receipts during the first two months of the year.

China retained a target for GDP growth of about 7.5% in 2014, according to the work report delivered by Premier Li Keqiang this morning. The goal for M2 growth and inflation was set at 13% and 3.5%, respectively.

European and US equities ended higher Tuesday, and so did LME base metals.

SHFE 1405 copper contract prices may move at RMB 48,900-49,500/mt on Wednesday, and spot copper in China should be offered at discounts of RMB 50-150/mt against the SHFE current month copper contract prices.

LME copper
SHFE night trading

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