SMM Copper Market Morning Review (2014-4-16)

SHANGHAI, Apr. 16 (SMM) – The NY Empire State Manufacturing index released Tuesday fell short of forecast, and crisis in Ukraine worsened. In China, the PBOC data showed new RMB lending was RMB 1.05 trillion, slightly higher than the RMB 1 trillion median value based on its survey. M2 growth missed expectations, hitting its lowest since comparable records began. This left market pessimistic on China’s GDP growth, resulting in a sell-off of riskier assets. LME copper prices fell to a low of USD 6,513/mt before closing at USD 6.560/mt, a decline of 1.5%.

SHFE 1407 started at RMB 45,870/mt during night trading of Tuesday, and moved higher to touch RMB 46,250/mt before ending the session at RMB 46,150/mt, down RMB 460/mt, or nearly 1%. Traded volumes for the most active contract during night session surged to about 300,000 lots, while positions increased by 4,114 lots. Holdings in SHFE 1408 copper contract rose by 13,714 lots.

Lousy data from China kindled market concerns Tuesday. Total financing in the first quarter dropped 9% to RMB 5.6 trillion, while new RMB lending was only RMB 3.01 trillion, a growth of 9.4%. The much-concerned M2 stood at RMB 116.07 trillion by the end of March, growing slower than the 13% expected at a rate of 12.1%, a 13-year low. Furthermore, the World Gold Council expected limited rise in China’s gold demand this year, exerting a drag on commodities, including gold and copper.

Ukrainian troops reportedly launched a “special operation” against separatists in the town of Kramatorsk in the east of the country Tuesday and the Kramatorsk airport went under control of Ukrainian military.

The US CPI rose 1.5% in March, beating the 1.4% expected and hitting the highest since last June. ZEW Indicator of Economic Sentiment for the euro zone edged lower from March’s 61.5 to April’s 61.2, with the indicator tracking current economic situation improving from -36.7 to -30.5. ZEW Economic Sentiment for Germany came in lower than the 45 forecast at 43.2 in April, down for the fourth month straight. The current economic situation indicator, however, hit its highest since July 2011 at 59.5.

The US stocks rose across the board, while European equities mostly dropped. LME base metals all closed lower.

On April 16, SHFE 1407 copper contract prices are expected to move between RMB 45,800-46,300/mt. Physical copper may be offered at premiums of RMB 350-500/mt against SHFE 1405 copper contract prices.