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SMM Copper Market Morning Review (2014-4-30)
Apr 30,2014 09:45CST
price review forecast
Investors remained cautious on Tuesday before release of major economic data from the US and China, particularly the Fed’s policy meeting.

SHANGHAI, Apr. 30 (SMM) – Investors remained cautious on Tuesday before release of major economic data from the US and China, particularly the Fed’s policy meeting. The EU said it will launch the most rigorous stress test on banking system, while the US House approved making a handful of business tax breaks permanent. Euro zone industrial and economic confidence index both fell in April, missing forecasts, driving down the euro and allowing the US dollar to stabilize. Poor trading depressed commodity market. LME copper prices tested a low of USD 6,715/mt before closing at USD 6,730/mt, down USD 15/mt, but outperformed other base metals on the exchange.

SHFE 1407 copper contract prices were trapped in a narrow band after opening at RMB 47,700/mt at Tuesday’s night trading. The prices hit a low of RMB 47,580/mt and finished the session at RMB 47,630/mt, down RMB 180/mt. Traded volumes for the most active contract were around 60,000 lots during the night session, and positions increased 2,876 lots.

In the euro zone, despite higher consumer confidence index, economic confidence index dropped to 102 in April, its first decline in a year. Germany’s CPI rose 1.3% in April, below the 1.4% forecast. In the US, the Case-Shiller’s 20-city home price index advanced 12.9% YoY in February, the lowest growth since last August and falling short of the 13% expectation. UK’s GDP grew 3.1% in the first quarter, its biggest rise since Q4 2007, but was slightly lower than the 3.2% rise economists had expected.

As for the situation in Ukraine, the EU imposed new sanctions to 15 Russian officials, including Russian Deputy Prime Minister Dmitry Nikolayevich Kozak, Minister for Crimean Affairs Oleg Genrikhovich Savelyev and Deputy Chairman of State Duma Ludmila Ivanovna Shvetsova, raising the number in its sanction list to 48. The EU said it had imposed travel bans and assets freeze on these officials.

China saw a series of events influencing the market. The Housing Administration Bureau of Nanning announced to loosen restrictions on house purchases in some regions in Guangxi, including Beihai, Fangchenggang, Qinzhou, Yulin, and Chongzuo, which is considered a prelude to an easing of purchase restrictions on residential real estate.

The People’s Bank of China said some investment products should be allowed to fail in an orderly way in its annual Financial Stability Report, provided that the risks are under control.

The Shanghai Stock Exchange issued a draft on cross-border stock trading plan it recently unveiled for public comments, stating that the quota for cross-border investments would be counted on a net-buying basis, meaning the capital flows in the markets will be much bigger than initially thought, which will benefit stock markets.

The PBOC drained RMB 50 billion from the market via 28-day bond repurchases Tuesday. Considering the RMB 141 billion due to mature this week, a net RMB 91 billion will be injected in the market, as compared to the RMB 2 billion net injection last week.

On Wednesday, SHFE copper for July Delivery is expected to trade between RMB 47,400-47,800/mt. In China’s physical copper markets, spot premiums over the SHFE 1405 copper contract prices may edge higher to RMB 600-850/mt.  

LME copper
SHFE night trading

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