Half Copper Smelters Believe Copper Prices to Fall

SHANGHAI, Sept. 20 (SMM) –With regard to recent copper price trends, SMM conducted a survey of 21 major domestic copper smelters, and about half of them hold pessimistic attitudes.

Based on the survey, about 50% copper smelters are negative towards copper prices in the future. The European debt crisis has begun to spread to the financial industry, but the European Union (EU) hasn't come up with an effective resolution. Actions taken by Germany, France and other large economies in the Euro-zone area are disappointing, and are suspected to evade responsibilities and win more time. Meanwhile, the US's debts and its extremely unbalancing GDP structures couldn't be easily overcome, while China's continuous high inflationary risks and other uncertain factors are persistent in global economic market, severely depressing investor confidence and bullish sentiment. Due to constant negative news, copper prices will fall further.         

About 25% copper smelters in the survey held the view that the US and European governments are all actively looking for solutions for their debt problems since they don't want to see a contagion of the debt crisis, although there hasn't been an effective resolution at present. Therefore, LME copper prices will mostly fluctuate around USD 8,500/mt, with limited downside room.

Around 20% surveyed copper smelters said the SHFE/LME copper price ratio has improved significantly following the latest round of copper price drops, and creates profiting room for importers. In this context, Chinese buying activities will increase, which will support copper prices. In addition, copper consumption will gradually grow in late September, which will restrict the downward momentum for copper prices. However, the significant improvement of global economic environment needs more time. Hence, LME copper prices will need to break the resistance at USD 9,200/mt before moving higher.

Approximately 5% copper smelters in the survey can't predict about future copper prices.