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SMM Copper Market Morning Review (2014-4-11)
Apr 11,2014 10:04CST
price review forecast
LME copper prices showed limited changes and closed at USD 6,650/mt, underperforming other base metals.

SHANGHAI, Apr. 11 (SMM) – Market confidence improved some on Thursday, with CB Insights reporting that the US venture capitalists put USD 9.99 billion to work in 880 deals in the first quarter, a 44% boost in funding and the highest since 2001. Meanwhile, the initial jobless claims for last week dropped to a seven-year low of 300,000, indicating recovering labor market. Coupled with weakening US dollar, commodities stage a strong rally. However, the US stocks dropped in the aftermath of profit-taking following release of minutes from FOMC meeting. The NASDAQ Biotechnology Index was off almost 20% from its all-time high. LME copper prices showed limited changes and closed at USD 6,650/mt, underperforming other base metals.

SHFE 1407 started Thursday’s night trading at RMB 46,430/mt and closed at RMB 46,440/mt, up RMB 220/mt, with a session high of RMB 46,440/mt and low-end price at RMB 46,260/mt. Traded volumes for the most active contract fell to some 120,000 lots during the night session, while positions increased 7,484 lots.

China’s March trade data released Thursday significantly fell short of market expectations. Import and export value fell by 1% to a total of USD 965.88 billion during the first quarter, adding to concerns that China’s Q1 GDP growth could fall to a five-year trough. Commodity imports, however, failed to decrease with copper imports up 37.8% YoY to 1.33 million mt during the same period. Base metals and financial markets responded little to these mixed figures, though.

In the US, the initial jobless claims made public overnight were reported at 300,000 last week, overshooting forecasts and touching the lowest level since May 2007. Despite the encouraging jobless claims, three main US share indexes surrendered gains over the last two trading days against disappointing estimates for US stocks financial reports and IPOs by 14 enterprises. The Dow and the S&P 500 notched the biggest daily fall since February 3, while the Nasdaq recorded the largest daily decline since November 9, 2011. The tumble in US stocks should restrict the rebound in base metals prices in the near term.

The Bank of England announced overnight to keep its 0.5% benchmark interest rate and GBP 375 billion bond-buying stimulus programme unchanged, which matched market forecasts. It was also worth noting that Greece returned to the capital markets by selling EUR 3 billion worth of bonds since its economy nearly collapsed in 2010. The Greek economy has showed some signs of recovery in the wake of bailouts and debt restructuring following the European debt crisis, boosting hopes of the euro zone’s economic recovery.

Asia-Pacific stocks were mixed, while European and US stocks were mostly down. LME gold and silver closed up 0.54% and 0.79%, respectively. LME base metals prices ended higher across the board.

On April 11, SHFE 1407 copper contract may trade at RMB 46,000-46,500/mt, and spot premiums over SHFE 1404 copper contract prices may narrow slightly to RMB 160-240/mt.

LME copper
SHFE night trading

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