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SMM Copper Market Morning Review (2014-4-10)
Apr 10,2014 10:05CST
price review forecast
Source:SMM
Momentum is building for the European Central Bank to further loosen monetary policies as the euro zone inflation for March was reported at its lowest since 2009 and below 1% for six months in a row.

SHANGHAI, Apr. 10 (SMM) – Momentum is building for the European Central Bank to further loosen monetary policies as the euro zone inflation for March was reported at its lowest since 2009 and below 1% for six months in a row. However, several ECB officials have warned the risks from any new easing measures lately. LME copper prices dropped below USD 6,600/mt to test a low of USD 6,576/mt Wednesday. However, the minutes from last FOMC meeting released later caused the US dollar to slump and allowed stocks to bounce back. In response, LME copper prices also leveled out, but caution before announcement of Chinese trade data was still weighing market on, with LME copper finally closing at USD 6,626/mt, down USD 56/mt.

During the night session on Wednesday, SHFE 1407 copper contract started at RMB 46,400/mt and soon slipped to RMB 46,000/mt before finishing the session at RMB 46,300/mt, down RMB 330/mt. Traded volumes for the most active contract increased to 210,000 lots, while positions soared by 10,180 lots.

The minutes from the US Federal Reserve’s March 18-19 meeting showed that policymakers were unanimous in demanding to raise the thresholds for an interest rate hike. In addition, the minutes did not specify the Fed was about to increase rates six months after the end of its QE stimulus program. Fed officials also chalked up recent US economic slowdown to unusually severe winter weather and claimed that the global economy could take a hit from the escalation of the Ukraine crisis. The minutes released Wednesday effectively eased market angst over the Fed’s possible rate hikes. In response, US share indexes were up across the board. The US dollar index closed lower for a fourth straight trading day, but non-US currencies had a strong showing.

In China, the State Council made public the mid-term review on the implementation of the twelfth five-year plan following the tax reduction for small enterprises and the acceleration of railway construction investment last week. The chief administrative authority pointed out that China’s economy would encounter downside pressure in the future, and that fiscal and monetary policies solely on demand management would not suffice to bolster growth. It proposed to attach due importance to both demand and supply management, and to concentrate on increasing supply and improving efficiency. Moreover, the People’s Bank of China (PBOC)’s governor Zhou Xiaochuan was reported to conduct inspections in Shenyang, Jiaxing, Hangzhou, and Shanghai in the next 14 days. This fueled hopes of new stimulus measures in markets.

In Europe, UK’s February trade deficit narrowed to GBP 9.094 billion, and imports and exports both fell. Germany’s February trade account surplus was only EUR 15.7 billion, while its exports fell by 1.3% to the worst level in nine months, but February imports rose to the highest since the reunification of Germany.

European and US share indexes closed higher. LME gold was up 0.25%, whereas LME silver was down 0.78%. LME base metals ended with gains, except for LME copper and zinc.

On April 10, SHFE 1407 copper contract is expected to trade at RMB 46,000-46,600/mt, and spot copper may be offered at premiums of RMB 200-280/mt over SHFE 1404 copper contract prices.


 

LME copper
SHFE night trading

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