SHANGHAI, May 2 (SMM) – With regard to copper price movements for the near future, a recent SMM survey of 21 major domestic electric wire and cable producers revealed the following insights:
43% of electric wire and cable producers SMM surveyed expect further downside room for copper prices, pointing to the long-standing market surpluses in domestic markets. Besides, copper semis producers have been negatively affected by sluggish export orders for their terminal products, and the recent Canton Fair confirmed that new export orders are mostly small and last for a short period of time, reflecting somehow that demand in overseas markets is unlikely to improve noticeably over the short term. Meanwhile, slowing domestic investments and consumption have dampened market demand for copper semis. On the fundamentals side, the existing copper price RMB 58,000/mt cannot entice downstream producers to buy. Coupled with the fact the increasing spot copper premiums in London will propel domestic bonded warehouses stocks to the LME, SHFE copper prices will probably fall to as low as RMB 55,000/mt for the near future.
38% of the surveyed producers see copper prices hovering near current values for the foreseeable future. Domestic copper supply remains sufficient at present, while overseas supply is tight, boosting long investor activity overseas, which will cap copper's downside room. The macroeconomic front is relatively quiet, while the European debt crisis occurred once in a while, which, however, is unlikely to impose a great impact on markets. The possibility of QE3 implementations is limited as the US economy is recovering stably, despite constant market speculations, and there is also little possibility that China will introduce large-scale stimulus measures and loose monetary policy given a higher anticipation over the country's 7.5% GDP growth target. As such, these producers expect copper prices to lurch around RMB 58,000/mt for the near future.
The remaining 19% of producers cannot predict where future copper prices are headed.