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SMM Copper Market Morning Review (2014-3-25)
Mar 25,2014 10:23CST
price review forecast
LME copper prices remained weak on Monday and closed at USD 6,469/mt.

SHANGHAI, Mar. 25 (SMM) – China’s weak manufacturing data released Monday exerted limited influence on the market, as investors began to expect further stimulus in China. In Europe, the activity in Germany’s private sector slowed unexpectedly in March, while output from French private sector climbed to a 31-month high. The euro zone manufacturing PMI for March dropped to 53.0 from 53.2. US Markit manufacturing PMI was only 55.5 in March, lower than the 56.5 expected, with the final reading for February at 57.1. The slower growth in US employment caused a decline in factory orders. These economic releases have turned investors more cautious. LME copper prices remained weak on Monday and closed at USD 6,469/mt.

SHFE 1406 copper contract prices started at RMB 45,480/mt during Monday’s night session, and met resistance at RMB 45,630/mt. The June-delivery SHFE copper hit a low of RMB 45,230/mt before closing at RMB 45,270/mt, up RMB 20/mt. Traded volumes for the most active copper contract fell to 250,000 lots, while positions showed limited positions.

France’s March PMIs in manufacturing and service sectors both handily beat expectations to jump above the 50 mark, whereas the euro zone’s flash manufacturing PMI hit a three-month low during the same period. US preliminary Markit manufacturing PMI was reported significantly lower at 55.5 during March due mostly to a slowdown in jobs growth and factory orders. Three major US stock indexes closed lower across the board after the release of these weak economic data.

HSBC’s China flash PMI for March fell to a low of 48.1 last seen in July 2013, below the 50 mark for a third straight month, and contradicted the perception negative PMIs in January and February were caused by cold winter weather and the Chinese New Year holiday. Nevertheless, some investors also had higher expectations for the Chinese government to introduce stimulus measures to shore up its economy. As a result, base metals prices and stock markets did not see significant pullbacks.

San Francisco Fed President John Williams overnight said that markets misinterpreted the statement by US Federal Reserve Chairwoman Janet Yellen and that the US Fed will not raise interest rate before the second half of next year. In addition, he added that the low interest rate will be kept in place for quite some time and that the Fed’s monetary policy may return to normal at the end of 2016. The dovish comments soothed market angst over Janet Yellen’s hint at a sooner-than-expected rate hike, sending the US dollar index off from highs.

Home prices fell sharply in some regions of China, causing investor concerns about a potential contraction in Chinese property markets this year.

The US dollar index ended down 0.25%. Asia-Pacific stocks rose, but European and US stocks fell broadly. LME base metals prices were mixed.

On Tuesday, SHFE 1406 copper contract should trade at RMB 44,900-45,600/mt, and spot copper may be quoted at premiums of RMB 60-130/mt over the SHFE 1404 copper contract prices.


LME copper
SHFE night trading

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