SHANGHAI, Jul. 29 (SMM) – Wire and cable producers hold quite different opinions on copper price trends, according to a recent survey of 20 domestic wire and cable producers conducted by Shanghai Metals Market (SMM).
40% of the surveyed producers believe LME copper will hover at USD 7,000/mt as prices will gain buying support at USD 6,800/mt, offsetting the bearishness in the market. Premiums for spot copper have been reported recently, leaving little room for decline in copper prices.
On the policy front, no substantial progress for monetary policies in both US and China is expected in the near term, also leaving market without a clear short-term trajectory.
20% of producers are bullish. Copper prices had been dragged down earlier due to negative market expectations, and are thus little affected by an 11-month low HSBC China flash PMI. Rather, market focus is shifting to concrete policy of the central government.
The State Council has announced that it is suspending the value-added tax (VAT) and turnover tax for small businesses with monthly sales below RMB 20,000 and is starting to deploy reforms of railway investment and financing regime, sending positive signals. The premiums for spot copper and the falling copper inventories will also make up for the negative influence from waning demand. Thus, some optimistic investors expect copper prices will rebound.
10% of the surveyed producers are bearish, noting the 60-day moving average will be a strong resistance for LME copper in the recent months. Rio Tinto’s OT project has begun producing, while large mines overseas also reported output growth in Q2. Market expects mounting oversupply pressure in copper market in H2. Meanwhile, the fact that Fed will scale back the asset purchase sooner or later leave some investors pessimistic to copper market.
The remaining 30% of producers are not certain about outlook for copper market.