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SMM Copper Market Morning Review (2014-4-3)
Apr 3,2014 09:34CST
price review forecast
LME copper prices tested a high of USD 6,734/mt before closing at USD 6,670/mt Wednesday, up USD 12/mt.

SHANGHAI, Apr. 3 (SMM) – No losses were reported from Collahuasi copper mines after the Chilean earthquake, but some workers were evacuated and several ports for metal exports were still closed, suggesting possible impact on the country’s foreign trade. However, investors have digested the news, with its influenced on copper prices fading. Poor economic data from Europe dragged down the euro, in turn pushing up the dollar. But the US ADP job data hit a three-month high in March, and February’s factory orders also increased, allowing US stocks to extend gains and S&P 500 to refresh record. LME copper prices tested a high of USD 6,734/mt before closing at USD 6,670/mt Wednesday, up USD 12/mt.

The most active SHFE copper contract prices started at RMB 47,040/mt at Wednesday’s night trading and drifted lower before finishing at RMB 46,570/mt, down RMB 140/mt. Traded volumes for the most active contract rose to 190,000 lots for the night session, and positions increased by 8,702 lots. With some shorts selling at highs, copper prices may be weighed on during daytime of April 3.

Chinese government outlined a modest stimulus against the flagging growth after a meeting on Wednesday, including railway investment, tax relief for smaller companies, and low-income housing. The government planned to put over 6,600 km of railway lines into operation this year, a rise of 1,000 km from 2013. Of them, nearly 80% will be constructed in central and west China. Besides, measures for further railway investment reforms were also proposed.

Economic data in the US and Europe showed diverged trends. The euro zone PPI dropped 0.2% on the month in February, down 1.7% from a year ago, its biggest YoY decline since December 2009. Euro zone’s GDP growth for the last quarter of 2013 was revised down from 0.3% on a quarterly basis to 0.2%. The data fueled expectations that the European Central Bank may roll out more easing policies.

In the US, the ADP reported private sector added 191,000 jobs in March, lower than the 195,000 expected, but February’s figure was revised up to 178,000. February factory orders increased 1.6% in February, its best showing in five months, and beating the 1.2% growth expected.

The US dollar index increased markedly. European and US equities both rose. All base metals on London Metal Exchange, except zinc, registered growth.

On April 3, SHFE 1407 copper contract prices are expected to move at RMB 46,500-47,000/mt, and spot copper may be quoted at premiums of RMB 120-200/mt over the SHFE current-month copper contract prices, as buyers considered any premiums above RMB 200/mt unacceptably high.

LME copper
SHFE night trading

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