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SMM Copper Market Morning Review (2014-4-9)
Apr 9,2014 10:32CST
price review forecast
Source:SMM
The IMF slashed the global economic forecast to 3.6% in its latest report considering the weak European economy and stumbling recovery in Japan, as well as higher lending rates in emerging markets.

SHANGHAI, Apr. 9 (SMM) – The IMF slashed the global economic forecast to 3.6% in its latest report considering the weak European economy and stumbling recovery in Japan, as well as higher lending rates in emerging markets. In other news, the EU will establish a support group to offer financial and political aids to Ukraine. LME copper prices thus fell briefly but gained support at USD 6,630/mt. Later, US states’ tax collections reportedly hit a record USD 846.2 billion in 2013, up 6.1%. That, combined with a rebound in US stock markets and a 0.6% fall in the US dollar index, allowed LME copper prices to level out and close at USD 6,682/mt, up USD 7/mt.

During the night session on Tuesday, SHFE most active copper contract started at RMB 46,580/mt and closed at RMB 46,790/mt, up RMB 60/mt. Traded volumes declined to about 100,000 lots, while positions increased by 6,008 lots.

Investors were mostly focused on several US Federal Reserve officials’ speeches concerning easy monetary policy with the dearth of market-driven news. Narayana Kocherlakota, president of the Minneapolis Fed, stated the US Fed should further cut the fed funds rate and also consider lowering excess reserve ratio to facilitate US economic recovery. Philadelphia Fed President Charles Plosser noted that the Fed should adjust its forward guidance to some extent and offer more conditions for the tightening of its monetary policy. He also added that it would be quite some time to come before the Fed could pull out of support to the US economy eternally. In response to these dovish comments, the US dollar index notched a sharp fall, closing lower for a fourth straight trading day and helping support base metals prices.

The Ukraine crisis continued to deteriorate on Tuesday. The Ukraine police was reported to arrest 70 people occupying local government building in eastern city Kharkiv, but pro-Russia protestors in other two cities still held their ground. The Ukrainian government declared that these violent acts were fermented by Russia to split Ukraine. Russian Foreign Minister Sergei Lavrov also warned that using force to end the protests in eastern Ukraine could lead to civil war. US Secretary of State John Kerry said that “recent events could potentially be a contrived pretext for Russian military intervention just as we saw in Crimea”. In this context, market risk aversion sentiment rose, with London gold prices closing up 0.88%. As capital flocked in the euro zone from Ukraine and Russia for risk aversion, the euro finished higher, buttressing base metals prices

Meanwhile, the International Monetary Fund (IMF) lowered its forecast for 2014 global GDP growth to 3.6%, down from 3.7%, but remained its 7.5% growth forecast for China’s GDP this year.

Main European share indexes finished lower, while US shares stabilized temporarily. Asian shares were mixed, and the Shanghai Composite ended up 1.92%, aided by the strength in banking shares. LME base metals prices closed higher, except for LME tin and nickel prices.

On April 9, SHFE 1407 copper contract is expected to trade at RMB 46,500-47,000/mt, and spot copper may be offered at premiums of RMB 220-320/mt over SHFE 1404 copper contract prices.
 

LME copper
SHFE night trading

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