SMM Copper Market Morning Review (2014-4-24)

SHANGHAI, Apr. 24 (SMM) – On Wednesday, economic data from the US turned out weak, with FHFA house price index growing only 6.9% in February, the slowest pace in the past 13 month. The Markit April manufacturing PMI for the US fell short of forecast and was lower than March’s level. Seasonally adjusted new home sales in March dropped 14.5% on the month to an annualized 384,000, the lowest since July 2013. Market players believe growth in the US housing market may continue slowing. The US stocks thus fell across the board. LME copper prices fell to a low of USD 6,625/mt, but rallied at the tail of trading to close at USD 6,677/mt, up USD 20/mt.

SHFE 1407 copper contract prices opened at RMB 46,660/mt at Wednesday’s night session and moved narrowly before ending the session at RMB 46,760/mt, an increase of RMB 130/mt. Traded volumes and positions for the July-delivery copper both held steady.

HSBC’s China flash manufacturing PMI for April released early Wednesday was reported at 48.3, a touch higher than March’s 48.3 and level with expectations. A series of small scale pro-growth policies unveiled by the Chinese government helped a mild recovery in the manufacturing sector, but the PMI still hovering below the 50 mark fueled market angst over a slowdown in China’s economy. In addition, the number of enterprises which have disclosed their IPO plans come to 75, exerting further downward pressure on China’s stock markets.

Meanwhile, PMIs from the euro zone, Germany, and France were mixed in April. France’s PMI missed market forecasts, but PMIs from the single currency union and Germany both rose, triggering a rally in the euro. European Central Bank Governing Council member Ewald Nowotny Wednesday reiterated that the ECB should wait until June before considering quantitative easing since he saw no deflationary threat in the euro zone.

US new home sales made public late Wednesday slid 14.5% MoM to an annualized rate of 384,000, below the estimated 400,000 and a fresh 8-month low. Financial data firm Markit reported that the country’s flash manufacturing PMI for April stood at 55.4, shy of market expectations. These soft economic reports capped a 6-day gaining run of US stocks.

The US dollar index eased 0.04%, while the euro ticked up 0.08% against the US dollar. Asia-Pacific stocks notched a drop across the board. LME base metals prices were mixed.

On April 24, SHFE copper for July Delivery is expected to trade between RMB 46,400-46,900/mt. Copper is expected to be offered at premiums of RMB 500-600/mt against SHFE 1405 copper contract prices in China’s physical market.