SHANGHAI, Oct. 29 (SMM) – China's latest PMI rose to a three-month high, but still remained below 50, sending the Shanghai Composite Index down below 2,100. SHFE copper prices proved more resistant to declines than LME copper and helped raise the SHFE/LME copper price ratio to 7.28. SHFE copper prices still moved lower, however, to as low as RMB 56,720/mt, and were down 4% for the week. Despite buying support at the lows, SHFE copper trading was still dominated by short sellers.
In last week's spot markets, the SHFE/LME copper price ratio rose to around 7.28, resulting in an increase in imported copper supply. Hedged copper also flew into markets, adding to copper supply. Copper discounts thus widened to RMB 300/mt. Traders took advantage to enter markets, but downstream producers only increased purchases slightly at prices around RMB 57,000/mt as market pessimism grew.
In the coming week, SMM expects SHFE copper prices will fall below RMB 57,000/mt and may fall to around RMB 56,500/mt. Spot copper discounts are expected to grow initially, but then shrink.