SMM Copper Market Morning Review (2014-4-25)

SHANGHAI, Apr. 25 (SMM) – Last week’s US initial jobless claims were reported lower than expected, but durable goods orders for March rose steadily to post its biggest growth since last November, a sign that the US economy is recovering from the inclement winter. In response, the US stocks bounced back, bolstering commodities. LME copper prices extended gains and touched a high of USD 6,771/mt, to end at USD 6,751/mt.

SHFE 1407 copper contract prices started higher at RMB 47,260/mt at night trading Thursday and climbed to a high of RMB 47,770/mt before ending the session at RMB 47,730/mt, an increase of RMB 770/mt. Traded volumes for the most active contract grew to 230,000 lots during the night session, and positions increased 2,920 lots.

US durable goods orders rose by 2.6% in March, the biggest monthly rise since November 2013, suggesting that the country’s economic growth recovered from unusually cold winter weather seen at the end of last year and early this year. Initial jobless claims for last week added 24,000 to 329,000, exceeding forecasts and the previous week’s figures and hitting the largest weekly gain since last December. The 4-week moving average of the jobless claims, however, maintained at recent lows, while continuing jobless claims notched a fresh low last seen in December 2007. Given these relatively encouraging economic reports, market participants are bullish on US April nonfarm payrolls scheduled for release next week. Apple’s financial report for the first quarter showed late Thursday that its profits and operating income both came ahead of market expectations, fueling momentum in US stock market.

Markets responded little to the speech delivered by European Central Bank Mario Draghi since he failed to offer new guidance on the ECB’s monetary policy.

In China, the People’s Bank of China (PBOC) withdrew a total of RMB 42 billion from open markets following a series of operations, while commercial banks had to submit fiscal deposit in large amounts by the end of April. The Shanghai Interbank Offered Rate (Shibor) also rose back Thursday to 4.32% from last Friday’s 3.93%, up for three straight trading days.

The US dollar index drifted 0.13% lower, while the euro crept up 0.11% against the US dollar. European and US stocks rose across the board, but Asia-Pacific stocks mostly closed lower. LME gold and silver finished up 0.73% and 1%, respectively. LME base metals all ended with gains except for nickel.

On April 25, SHFE copper for July Delivery is expected to trade between RMB 47,200-47,800/mt. Copper is expected to be offered at premiums of RMB 700-800/mt against SHFE 1405 copper contract prices in China’s physical market.