SMM Copper Price Forecast (Dec. 26-Dec. 30)

SHANGHAI, Dec. 26 (SMM) –The People's Bank of China (PBOC) announced China's total yuan funds outstanding for foreign exchanges fell for a second consecutive month during November, depressing market sentiment and leading the Shanghai Composite Index to fall below 2,200 points, or down 3% for the week. As a result, SHFE copper prices fluctuated around RMB 54,000/mt, with increasing resistance at RMB 55,000/mt. SHFE prices remained weaker than LME copper prices, which caused the SHFE/LME copper price ratio to fall further. Trading volumes were down by more than 1 million lots for the week since speculative interest by short-term investors waned. Although the lowest traded price rose last week, SHFE copper prices need more support to gain upward momentum. 

In spot markets, cash flow pressures were even more pronounced at the year's end, causing cargo-holders, especially those holding imported copper, to aggressively sell, causing spot copper discounts to expand last week. Downstream producers were still purchasing on an as-needed basis, while speculators had no interest in buying due to cash flow problems. As a result, market activity was very light. 

SHFE copper prices are expected to fluctuate in the RMB 53,000-55,000/mt range in the coming week, and spot copper discounts will expand.