LME Copper to Underperform SHFE Copper Next Week, SMM Expects

SHANGHAI, Aug. 26 (SMM) – LME copper will swing widely next week, while SHFE copper is poised for a rebound, SMM expects.

SMM sees LME copper will between $ 4,600-4,750 per tonne. Growth in LME copper stocks has slowed down significantly, which might ease short selling pressure.   

The US will release July personal incomes, existing home sales and jobless rate in the coming week, which are expected to beat June’s figures, while personal expenditures and ADP employment will likely fall. Non-farm payrolls are expected to increase 180,000 jobs in August, lower than July’s level, but still within rational level. In this context, the US dollar will fluctuate widely between 94.5-95.2.

Iraq announced on Thursday that it will attend OPEC meeting to be held at the end of September, which will increase possibility that an agreement will be reached over oil output freeze. Crude oil prices should fluctuate between $ 46-48/bbl.  

SHFE 1610 copper should advance to 36,000-37,000 yuan per tonne. 

China’s official manufacturing PMI is expected to see no change in August from July, while Caixin’s China manufacturing PMI will likely drop in August, both due for release on September 1. This will reignite hopes for monetary easing. The nearing G20 Summit in Hangzhou in early September will hurt copper production and demand. The technical side is positive for SHFE copper, but any upside room will be limited since capital has flowed into zinc market. 

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