SHANGHAI, Jun. 29 (SMM) – HSBC announced a preliminary China manufacturing PMI for June of 48.1, down from May's final reading of 48.4 and a new seven-month low, while the new export order sub-index registered its largest drop since March 2009. In response, the Shanghai Composite Index fell by 2%, to below 2,200/mt, and further weighed down SHFE copper prices to around RMB 54,000/mt. Despite demand support at the lows, sales at the highs dominated markets.
In spot markets last week, the rising SHFE/LME copper price ratio prompted cargo-holders to move goods in order to generate cash at the month's end, increasing market supply. Cash flow problems and the lack of clear copper price trends greatly depressed purchases from both traders and downstream producers. This resulted in market surpluses.
SMM believes SHFE copper may break through the resistance level of RMB 55,500/mt in the coming week.