MARKET COMMENTARY
Copper had a V-shaped move over the course of the last month; after plunging to a low of just over $6600 in mid-June on account of jitters emanating from the Chinese port scandal at Quindao, prices shot up by about $600 a ton over the next three weeks.
Copper moved in range of $6615-7025 last month. U.S. consumer sentiment rose in June as consumers remained optimistic the sluggish first quarter was due to difficult winter conditions. Euro zone economic sentiment fell unexpectedly in June on fears that fighting in Iraq would push up oil prices and that any escalation of the Ukraine crisis could drag on euro zone growth. On domestic bourses weaker local currency capped the downside to some extent.
Supply short fall and encouraging data from US and China will continue to assist the prices in the month of July 2014. The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index rose more than expected to 50.8 in June from May's final reading of 49.4. Copper in LME is set for the biggest quarterly rise since September as stockpiles fell and amid bets that the U.S. economy will rebound from a first quarter contraction. Inventories monitored by the main exchanges in London, Shanghai and New York have plunged to the lowest since 2008. Copper seasonal demand is expected to wane going into the third quarter, though the shortage in supply is expected to keep a flor under prices.
Copper edged further off 4-month peaks today as investors took profit and stocks rose for a second day running, though lingering supply concerns put a strong floor under prices. London Metal Exchange data showed stocks rose by 2,850 tonnes - a second straight day of gains - though overall, stocks remain near their lowest levels in six years, supporting prices.
Three-month copper on the London Metal Exchange was last bid at $7,115 a tonne in official midday rings, down 0.49 percent. Copper closed down on Friday but still posted its biggest weekly rise in more than nine months, after touching a four-month peak earlier in the session.
Investors are waiting to see if record share prices will be justified by quarterly earnings reports and forecasts in the United States and elsewhere, with aluminium producer Alcoa kicking off the U.S. earnings season on Tuesday.
On the demand side, global economic activity should strengthen in the second half of the year and accelerate in 2015, although momentum could be weaker than expected, International Monetary Fund chief Christine Lagarde said on Sunday, hinting at a slight cut in the IMF's growth forecasts.
China's economic growth quickened in the second quarter from the previous three months, but further modest government support measures will still be needed, Premier Li Keqiang said on Monday.
