SHANGHAI, Jun. 19 (SMM) – SMM undertook a survey of 21 copper wire rod producers and found that most of them believe copper prices will encounter resistance on both upside and downside.
45% believe copper prices will fluctuate narrowly in the near term. Regulations on foreign trade triggered market concerns over copper imports for financing purpose. Although the high import premiums were not affected yet, the market no longer accept high copper prices due to weakening copper financial attribute, so copper prices will hardly rebound. But with support from bargain hunters and due to scrap copper tightness, copper prices will find support at RMB 53,000/mt.
30% enterprises anticipate copper prices will stop rebounding before entering downward track. Copper inventories fell slowly or even grew recently due to the onset of the low demand season, restraining copper from rebounding. Besides, expectations of an end to QE3 increased as US economy improved, so the US dollar index is expected to fall before rising, which will weigh on copper prices.
15% enterprises that are optimistic towards copper prices believe smelters will continue to cut output and market supply, so spot premiums will climb again. Given domestic supply shortfalls, copper prices are expected to soar to RMB 54,000/mt.
The remaining 10% are uncertain of price trends.