SMM Copper Market Morning Review (2014-4-17)

SHANGHAI, Apr. 17 (SMM) – Reports from China that reserve requirement ratio (RRR) for some rural banks would be cut gave a boost to the market Wednesday. In response, LME copper prices touched a high of USD 6,700/mt. Economic data from the US turned out mixed, but the continued growth indicated in Fed’s Beige Book drove a rebound in the US stock market. LME copper prices closed at USD 6,632/mt, up USD 72/mt.

SHFE 1407 started at RMB 46,730/mt during Wednesday’s night trading, but then gave back some gains to finish the session at RMB 46,500/mt, up RMB 430/mt. Traded volumes for the most active contract during night session remained stable at 210,000 lots, and positions increased by 4,094 lots.

Encouraging reports from China gave a boost to the market on Wednesday, with its GDP reportedly up 7.4% in the first quarter, beating the 7.3% forecast. Consumption and tertiary sector contributed largely to the economic growth. In addition, Premier Li Keqiang said the government should cut the RRR for some rural banks, fueling anticipation that RRR cut may be expanded to the whole banking sector in the future.

As for economic data from the US and Europe, the US factory production rose 0.7% in March, higher than the 0.5% expected, with February’s growth revised upward from 0.6% to 1.2%. March housing starts rose to an annual rate of 946,000, lower than the 973,000 expected. Building permits declined to 990,000 versus 1.008 million expected. The Fed’s Beige Book indicated that the nation’s economy largely emerged from a weather-related winter slump over the past six weeks, shoring up the market. Fed Chief Janet Yellen reiterated that interest rates will remain low for a “considerable time” after the bond purchases end.

The euro zone inflation for March was finalized at 0.5%, its lowest since November 2009.

European and US shares mostly closed higher, and LME base metals also rallied.

On April 17, SHFE 1407 copper contract prices are expected to move between RMB 46,200-46,600/mt. Physical copper may be quoted at premiums of RMB 500-600/mt against SHFE 1405 copper contract prices.