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SMM Copper Market Morning Review (2014-4-28)
Apr 28,2014 09:20CST
price review forecast
Escalating Ukraine crisis and the resultant risk aversion placed downward pressure on commodities market last Friday.

SHANGHAI, Apr. 28 (SMM) – Escalating Ukraine crisis and the resultant risk aversion placed downward pressure on commodities market last Friday. Meanwhile, disappointing financial reports form some large US firms caused the US and European shares to fall. LME copper prices, however, outperformed other base metals with aid from market fundamentals, and finished at USD 6,770/mt, up USD 19/mt.

SHFE 1407 copper contract prices started at RMB 47,800/mt at night trading last Friday and moved narrowly with price change seldom exceeding RMB 200/mt. Resistance at RMB 47,960/mt remained strong, and the July-delivery SHFE copper ended the session at RMB 280/mt higher at RMB 47,910/mt. Traded volumes for the most active contract were around 100,000 lots during the night session, and positions fell by 4,002 lots.

Last Friday, the tension in Ukraine intensified after pro-Russian forces seized a bus carrying OSCE observer. The EU and US condemned Russia for failing to abide by the agreement reached at Geneva meeting and claimed that they were ready to impose further sanctions on Russia on Monday at earliest. Rating agency S&P thus cut Russia’s credit to BBB-, one notch above “junk”. Russia’s central bank unexpectedly raised interest rate by 50 basis points to 7.5% to deal with the depreciating Ruble.

In other news, the University of Michigan Consumer Confidence Index was finalized at 84.1 for April, its highest since July 2013 and exceeding the 83 expected. However, the US stock prices were dragged down by worse-than-expected performance reported by then Amazon and Ford.

Reports from China also turned out mixed. China’s large industrials posted a 10.1% rise in total profit during the first quarter, accelerating 0.7 percentage point from just the first two months. Their profits in March alone increased 10.7% YoY, up 1.3 percentage points from the growth in the first two months. China Securities Regulatory Commission unveiled the list of another 25 companies that have disclosed their IPO plans, adding the total number to 122. IPO listing may be resumed as early as in May.

The US and European stocks closed lower. LME copper and nickel prices ended higher, but other base metals all posted losses.

On April 28, SHFE copper for July Delivery is expected to trade between RMB 47,600-47,800/mt. Copper is expected to be offered at premiums of RMB 1,000-1,300/mt against SHFE 1405 copper contract prices in China’s physical market.

LME copper
SHFE night trading

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