47% of Copper Wire Rod Producers Expect Copper Prices to Fluctuate Near Current Levels

SHANGHAI, Mar. 13 (SMM) – With regard to copper price trend for the foreseeable future, the latest SMM survey of 21 Chinese copper wire rod producers revealed the following insights: 

The survey showed that 47% of producers expect copper prices to fluctuate near current levels, pointing to the following reasons. First, post-holiday copper prices declined sharply owing to US fiscal deficit reduction, Italian election, and tighter Chinese housing controls. Nonetheless, as the impact from these negative factors abates, copper prices are likely to consolidate near current lows. Second, downstream producers became more willing to buy when copper prices slid below RMB 56,500/mt. Spot copper discounts recently turned into premiums, also reflecting a turnaround in copper demand. Both will lend support to copper prices. However, the US dollar index climbs gradually, and copper stocks remain high, which will depress copper prices.

Approximately 24% of copper wire rod producers are positive towards the outlook. These producers believe that the Chinese government will launch a set of stimulus measures following the NPC and CPPCC meetings. Moreover, copper consumption will pick up gradually as the traditionally high demand period approaches. But if the SHFE/LME copper price ratio increases, imported copper will flow into domestic markets in large quantities. This will result in significant increase in domestic copper supply, restricting copper price rebounds. 

Roughly 5% of copper wire rod producers are pessimistic, pointing to increasing US dollar index, uncertainty in Italian election, as well as soft copper consumption.

The remaining 24% of producers can not foresee future copper prices.