SMM Weekly Review and Forecast (Jul. 23-27)

張貼日期：Aug 06, 2012 9:35:13 AM

SHANGHAI, Jul. 30 (SMM) – Last week, the European and US manufacturing data showed continued contraction, and HSBC China PMI for July, though rallied unexpectedly, was still below the 50, indicting the shrink of manufacturing sector. Besides, borrowing costs in Spain and Italy continued climbing, and the risk of a Greek exit intensified. The escalating European debt crisis depressed market confidence, and pushed the US dollar index to hit a two-year high. Thursday night, Draghi’s promise to preserve the euro eased fears in the market, with the euro rebounding and the US dollar index falling to 82.70, trimming the losses in base metals. SMMI fell sharply by 2.29%. SMMI.Cu dropped the most by 2.83%, followed by a 2.55% decline in SMMI.Ni. Other metals also slipped by over 1%. Copper China’s government restated its commitment to curb the real estate markets, but this news drove the Shanghai Composite Index down by over 2% and to a new low for the year. Against this backdrop, SHFE copper prices slumped to RMB 53,600/mt, down from RMB 56,000/mt on July 20th, a drop of more than 3% for the week. Total trading volumes and positions increased by nearly 1 million and 85,000 lots, respectively, with selling pressures for forward SHFE copper contracts growing. SHFE copper prices stood above the 5-day moving average, but experienced strong resistance at RMB 55,500/mt.   As copper futures prices retreated, traded prices in spot copper markets fell below RMB 55,000/mt, turning investors bearish and flooding spot markets with hedged copper. The SHFE/LME copper price ratio stabilized around 7.3 and compelled imported copper cargo-holders to move goods for cash, leading to an increase in spot copper supply. A narrowing of the price gap among SHFE copper contracts, in addition to higher premiums, left few speculative opportunities for traders. Downstream producers continued to buy only as needed, so overall market transacti......