SMM Copper Market Morning Review (2014-7-4)

SHANGHAI, Jul. 4 (SMM) – On Thursday, the US trade deficit was reported down 5.6% to USD 44.4 billion in May, and its exports increased 1.0% to a record USD 195.5 billion. US non-farm payroll employment increased unexpectedly by 288,000 in June, with jobless rate down to 6.1%, its lowest since September 2008, and the average hourly pay also increased 2% from a year ago, above the 1.9% rise expected. Gold slumped following the releases, while crude oil prices increased. The Down and S&P 500 fell slightly but bounced back soon, with the former standing above 17,000 for the first time. LME three-month copper rallied at the tail of trading aided by buying activities of hedging funds, and climbed to a high of USD 7,187/mt before closing at USD 7,173/mt, up USD 39/mt.

The September copper on SHFE started Thursday’s night trading at RMB 51,070/mt, and met resistance at RMB 51,580/mt. The most active contract finally closed out at RMB 51,480/mt, up RMB 560/mt. Traded volumes for the most active SHFE copper contract were stable at around 270,000 lots, and positions rose by 15,152 lots.

On July 4, SHFE 1409 copper contract prices are expected to move between RMB 51,200-51,800/mt. Some cargo holders in China’s spot market may be hesitant to sell goods with SHFE copper extending gains. Spot copper in China is expected to be offered at premiums between RMB 50-120/mt against SHFE 1407 copper contract prices.