SHANGHAI, Aug. 2 (SMM) –With regard to recent copper price trends, SMM conducted a survey of major domestic copper smelters. About 54% smelters were optimistic towards copper prices, around 25% smelters believed copper prices will remain unchanged, and 13% smelters were pessimistic towards the outlook.
Based on the survey, copper smelters positive towards future price gains believed that copper prices have been advancing due to its financial property, despite the seasonal low demand period from July to August. First, against the backdrop of global inflation, there is still upward room for copper prices. Second, market concerns over the US debt ceiling talks recently have caused the US dollar index to move lower and although market players widely expect the US Democratic and Republican party leaders will finally reach a deal on the borrowing limit to avoid default, the US will still face a possible downgrade of its triple A credit rating. In this context, there is a high chance that the US dollar index will continue to fall, creating rising momentum for copper prices.
Around 25% copper smelters in the survey believed that recent copper prices will remain high and fluctuate. They believed there is a slim chance the US dollar index will decline further, given its current low levels, and since the US will not want further declines over fears of affecting its world position. In this context, copper prices will not be able to increase significantly. From trading volume changes in domestic spot markets, market players are not acceptable about prices above RMB 72,000/mt, which will not support copper prices. However, downstream buying interest is higher when copper prices fall back to RMB 71,000/mt, which will support copper prices.
Approximately 13% copper smelters believed copper prices will fall. As downstream processors can’t afford such high copper prices given seasonal low demand period and tight cash flows, copper prices will fall back in the short term.