SMM Copper Price Forecast (Jul. 30-Aug. 3)

SHANGHAI, Jul. 30 (SMM) – China's government restated its commitment to curb the real estate markets, but this news drove the Shanghai Composite Index down by over 2% and to a new low for the year. Against this backdrop, SHFE copper prices slumped to RMB 53,600/mt, down from RMB 56,000/mt on July 20th, a drop of more than 3% for the week. Total trading volumes and positions increased by nearly 1 million and 85,000 lots, respectively, with selling pressures for forward SHFE copper contracts growing. SHFE copper prices stood above the 5-day moving average, but experienced strong resistance at RMB 55,500/mt.

As copper futures prices retreated, traded prices in spot copper markets fell below RMB 55,000/mt, turning investors bearish and flooding spot markets with hedged copper. The SHFE/LME copper price ratio stabilized around 7.3 and compelled imported copper cargo-holders to move goods for cash, leading to an increase in spot copper supply. A narrowing of the price gap among SHFE copper contracts, in addition to higher premiums, left few speculative opportunities for traders. Downstream producers continued to buy only as needed, so overall market transactions were modest. 

SHFE copper prices will fluctuate around RMB 54,500/mt in the coming week and test resistance at RMB 55,000/mt.