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SMM Copper Market Morning Review (2014-6-3)
Jun 3,2014 09:42CST
price review forecast
Source:SMM
The People’s Bank of China and China Banking Regulatory Commission held a meeting last Friday to arrange RRR cuts for qualified rural banks, shoring up market confidence.

SHANGHAI, Jun. 3 (SMM) – The People’s Bank of China and China Banking Regulatory Commission held a meeting last Friday to arrange RRR cuts for qualified rural banks, shoring up market confidence. The official China manufacturing PMI for May advanced at its fastest pace this year to 50.8, indicating continued improvement of manufacturing sector. This encouraging news offset the negative effect from poor euro zone manufacturing data reported earlier. In other news, the US ISM admitted a mistake in its May manufacturing index estimate, and the revised index beat forecast. Therefore, US stock prices rebounded, with both the Dow and S&P 500 hitting new highs. LME three-month copper closed up USD 83/mt on Monday at USD 6,926/mt.

In China, Qingdao port has reportedly suspended shipments of aluminum and copper due to an investigation by authorities, but the news has yet to be confirmed by the government.

China’s official manufacturing PMI released over the weekend rose more than expected to 50.8 in May, up for a third consecutive month, which contributed to a rebound in base metals on Monday. Meanwhile, the country’s policy makers are expected to appropriately lower the reserve requirement for banks that have extended a certain amount of loans to rural borrowers and smaller companies, the State Council announced after a regular meeting led by Premier Li Keqiang.

In the US, Chicago’s manufacturing PMI rose to 65.5 in May, its fresh high since October 2013, while the country’s final manufacturing PMI released by Markit also crept up to 56.4 in the month. US ISM manufacturing PMI advanced to 55.4 during the same period. These encouraging economic reports all pointed to improving manufacturing activity in the US during May. Nonetheless, the country’s building spending growth for April fell to 0.2%, missing the expected 0.6% rise.

In the euro zone, France’s final manufacturing PMI dropped to 49.6 in May, arresting a rising stream through March to April, while the index for Germany also sank to a 7-month low. The single currency bloc’s manufacturing PMI dipped to a 6-month trough during the same period, which should raise hopes of accommodative monetary policy from the European Central Bank.

Most European and US shares closed higher. LME base metals prices finished with gains across the board.

On Tuesday, SHFE copper for August delivery may trade between RMB 48,500-48,900/mt, and copper premiums in China are expected to move higher to RMB 250-350/mt with cargo holders less willing to sell given improving cash flow at the beginning of the month.

 

LME copper

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