SHANGHAI, Jul. 11 (SMM) – With regard to copper price trends for the foreseeable future, the latest SMM survey of 22 major Chinese copper wire rod producers revealed the following insights:
Based on the survey, 45% of these surveyed producers expect copper prices to fluctuate near current levels in the near future. In their views, domestic copper consumption remains relatively sluggish as actual purchases were limited when spot copper prices climbed to RMB 56,000/mt. Combined with traditionally low demand period during July-August, copper prices lack foundation to move higher. However, when spot copper prices dropped to around RMB 54,000/mt, domestic copper consumers chose to buy and thus gave a strong support for copper prices. The macroeconomic front and the fundamentals side are neither bearish nor bullish, so SHFE copper prices are expected to fluctuate around RMB 55,000/mt in the near future while awaiting directions.
18% of copper wire rod producers are optimistic about the outlook as they believe prices are now driven by market news and capital instead of copper consumption. The impact of Europe's debt crisis on markets has abated. China's central bank recently slashed interest rates again and the European Central Bank also announced to cut interest rate by 25 basis points to 0.75%. Various signs show the resolution of major countries to boost economic growth, which can help recover investor confidence and push copper prices higher.
14% of these producers see further downside space for copper prices. Favorable news of relaxation in monetary policies came in but was not seen to produce substantive effects, and overall copper consumption remains pallid. Moreover, both the China Federation of Logistics & Purchasing and HSBC recently reported that China's PMI fell further in June, so it is still early to say China's economy has touched the low and will begin rallying. In addition, the Institute of Supply Management's US manufacturing PMI similarly dropped below the 50 mark for the first time in three years, an indication the US economic situation is also pessimistic. As such, these copper wire rod producers anticipate copper prices will fall further for the foreseeable future.
The remaining 23% of producers cannot predict future copper prices.