SMM Copper Market Morning Review (2014-3-7)

SHANGHAI, Mar. 7 (SMM) – US shares were mixed Thursday, with the S&P 500 index hitting new high. The Labor Department reported initial jobless claims for the week ending March 1 fell to the lowest in 11 months. The European Central Bank left its benchmark interest rate unchanged. The euro moved higher, while the US dollar index fell below 80. LME copper prices touched a high of USD 7,058/mt and closed USD 20/mt higher at USD 7,049/mt.

SHFE most active copper contract prices opened at RMB 49,180/mt at night session of Thursday, and rose to RMB 49,310/mt before closing at RMB 49,260/mt, up RMB 70/mt. Traded volumes dropped noticeably.

The US initial jobless claims for the week ending March 1 were 323,000, lower than the 336,000 expected and 349,000 a week earlier. The improved job data may bode well for the US growth which was hampered by the cold spell. The January factory orders declined 0.7%, better than the 1.5% fall in December.

The European Central Bank left its key interest rate unchanged at 0.25%, and the Bank of England also kept the 0.5% interest rate and GBP 375 billion asset purchasing program in place. The decisions matched market estimates. However, the ECB Chairman Mario Draghi did not mention any further monetary easing at the press conference after the policy meeting, disappointing investors. The euro broke through 1.38 against the dollar.

As Crimea’s parliament has voted in favor of joining Russia and voted to hold a referendum in 10 days time on the status of Crimea, the crisis in Ukraine worsened.

European and US equities rallied, and LME base metals also increased during US trading hours. SHFE base metals are expected to edge higher on Friday.

SHFE 1405 copper contract prices may move at RMB 49,100-49,500/mt on Friday, and spot copper in China should be offered at discounts of RMB 60-150/mt against the SHFE 1403 copper contract prices.