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SMM Copper Market Morning Review (2014-4-2)
Apr 2,2014 09:58CST
price review forecast
LME copper prices closed up USD 13/mt at USD 6,658/mt.

SHANGHAI, Apr. 2 (SMM) – On Tuesday, the head of the European Central Bank Draghi admitted deflation risk for the euro zone, and inflation for euro zone, Spain, and Germany released on the same day also indicated deflationary risk in the single currency union, raising expectation for further monetary easing by the central bank. The US ISM manufacturing index rose for the second month in March, while auto makers in the country also reported their sales beat forecasts. With influence of the Ukraine crisis receding, market players shifted their focus to the US nonfarm payrolls and ECB’s policy meeting. The US stocks extended gains on the first trading day of Q2, with S&P 500 closing at new high. LME copper prices closed up USD 13/mt at USD 6,658/mt.

The most active SHFE copper contract prices started at RMB 46,680/mt at Tuesday’s night trading and touched a low of RMB 46,500/mt before finding support and ending the session at RMB 46,640/mt, up RMB 10/mt. Traded volumes for the most active contract declined to about 80,000 lots for the night session, while positions increased by 8,654 lots.

The ISM manufacturing index, though below the 54 expected, improved to 53.7 in March. In the euro zone, manufacturing PMI was finalized at 53, matching estimate. PMI for France, Italy, and Spain was revised upward to 52.1, 52.4, and 52.8, respectively, with only German index revised down to 53.7. Euro zone jobless rate in February dropped to 11.9%, and the unemployed was down 12,000 in Germany during March, better than the 10,000 decline expected. This allowed the country’s unemployment rate to fall to 6.7%, lifting European and US stock prices.

The final HSBC manufacturing PMI for China was reported at 48, even lower than the preliminary reading which hit an eight month low. But the official PMI registered an increase from February to 50.3, driven by recovery in large enterprises, while the sub-indices for both small and medium companies remained below 50, in line with the HSBC PMI which mainly reflected activity at SMEs.

Xuzhou Zhongsen Tonghao New Board Co. in China missed an interest payment due March 28. This would be the first default in China's private-placement market, which may weigh the market on.

The US dollar index edged lower to end at 80.08. LME lead and zinc closed lower, while other base metals on the exchange posted slight rises.

On April 2, the most active SHFE copper contract may trade at RMB 46,500-47,200/mt, and spot copper may be quoted at premiums of RMB 80-140/mt over the SHFE current-month copper contract prices, with cargo holders holding prices firm.

LME copper
SHFE night trading

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