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SMM Copper Market Morning Review (2014-6-4)
Jun 4,2014 10:10CST
price review forecast
LME three-month copper prices hovered at USD 6,852/mt and closed at USD 6,864/mt on Tuesday, down USD 63/mt.

SHANGHAI, Jun. 4 (SMM) – On Tuesday, market was still influenced by the improving HSBC’s China manufacturing PMI. The euro zone inflation again fell to 0.5% before the ECB’s policy meeting in June. That, combined with the weak PMI data reported earlier, fueled expectations that the ECB will roll out further easing policies. In the US, factory orders increased more than expected in April, but stock price fell slightly. LME three-month copper prices hovered at USD 6,852/mt and closed at USD 6,864/mt on Tuesday, down USD 63/mt.

Copper for August delivery on SHFE opened lower at RMB 48,500/mt during Tuesday’s night session and moved in a narrow range before finishing the session at RMB 48,480/mt, down RMB 190/mt. Traded volumes edged lower to 60,000 lots, while positions gained 1,368 lots.

HSBC’s China final manufacturing PMI for May released early on Tuesday rose to a fresh 4-month high of 49.4, but was down slightly from the preliminary 49.7. The sub-index tracking new orders stabilized following a 3-month losing streak, while overseas demand showed signs of expansion. The sub-index for new export orders climbed sharply to 53.2, its biggest rise since April 2010, but the sub-index for manufacturing output contracted slightly, down for a fourth month in a row. The sub-index measuring finished goods inventories rose to 49.8 in May from its flash reading, but was down from April’s level and for the first time this year. Despite the improved manufacturing activity in May, it is still far too early to claim that the Chinese economy is bottoming out against the sluggish property market.

Data from the Eurostat revealed Tuesday that the euro zone’s CPI declined to 0.5% in May, down from April’s 0.7%, in a sign that the single currency bloc was still plagued with deflationary risks. Mario Draghi, President of the European Central Bank, went on record as saying that the ECB was poised to deal with any potential problems against a backdrop of persistently low inflation. In this context, market participants universally expect the ECB to lower its benchmark interest rate or even to adopt other accommodative monetary policies after this week’s meeting. Should the ECB cut the interest rate, the euro looks set to weaken against the US dollar, exerting downward pressure on base metals prices.

US factory orders growth reached 0.7% MoM in April, with March’s growth revised up to 1.5% from previous 0.9% and up for a third straight month, pointing to a steady recovery in the country’s manufacturing sector.

Most European and US shares closed down. The euro rose 0.22% against the US dollar. LME base metals were mixed.

On Wednesday, SHFE copper for August delivery may trade between RMB 48,200-48,600/mt, and copper premiums in China are expected to expand to RMB 250-400/mt.


LME copper
SHFE night trading

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