SMM Morning Review - 2010/6/17 Copper Market

SHANGHAI, June 17 (SMM) –

LME copper prices rallied during China's Dragon Boat Festival holiday, mainly supported by easing concerns over economic conditions in Europe, and continuous declines in the SHFE/LME copper price ratio. The Europe's factory production gained 9.5% in April, the most since the data started in 1991; Ireland and Spain reported positive sales of government bonds. The positive news offset negative impact from Moody's move to lower Greece's credit rating, a slowing manufacturing growth in China, as well as a weaker-than-expected economic data in the US. In this context, the euro gained strongly, and the US dollar index fell back as low as 85.9. The EU and US equities markets climbed higher following a stronger euro and a weaker US dollar, helping LME copper prices gain, reaching as high as USD 6,775/mt after rising above the 30-day moving average. On Wednesday evening, LME copper prices fell back to USD 6,600/mt, depressed by the US's unfavorable housing data, with operating rates down 10%.

On Thursday, SMM believes SHFE copper prices will rally to keep up rising pace on the LME copper market during Chinese Dragon Boat Festival holiday, with SFHE September delivery copper prices expected to move between RMB 52,500-53,500/mt. LME copper prices will remain closely tied to economic news. SMM expects the euro to fall after the round of rebound, and so LME copper prices will be pressed. SMM takes a relatively pessimistic view towards short-term copper prices.

To contact the writer on this report: iriszhu@smm.cn 

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