SMM Copper Market Morning Review (2015-3-6)

SHANGHAI, Mar. 6 (SMM) – LME copper prices closed lower at USD 5,819/mt on Thursday. LME copper stocks surged 10,250 mt recently to 318,375 mt, but the LME cash-to-three-month backwardation remained stable at USD 20/mt.

The Chinese government announced in its Government Work Report on Thursday to set its GDP growth target at around 7% this year, and forecasts for other economic indicators this year were also slashed.

European Central Bank President Mario Draghi announced on Thursday that the central bank will buy 60 billion euro worth of assets per month from March 9 until September 2016. He added that the quantitative easing will be extended further should inflation remain low then and voiced optimism towards the euro zone economy. Besides, the ECB raised the euro zone growth forecast for 2015 to 1.5%, but expects CPI growth to slow to zero. However, the central bank increased the inflation forecast for 2016 from 1.3% to 1.5% and predicts the figure to advance to 1.8% by 2017.

US initial jobless claims rose to a new high of 320,000 last week. US factory orders declined 0.2% MoM in January.

SHFE most-active copper contract started Thursday’s night trading at RMB 42,420/mt and climbed rapidly to RMB 42,720/mt. The May delivery then fell to RMB 42,520/mt and ended the session at RMB 42,530/mt, posting a RMB 110/mt rise. Positions in the May delivery copper grew 522, and trading volumes were about 150,000 lots.

SHFE 1505 copper contract should trade at RMB 42,000-42,600/mt on March 6. Spot discounts will be RMB 20-100/mt.