SHANGHAI, Oct. 16 (SMM) – 52% of copper wire rod makers expect copper prices to hold steady in the near term, according to the latest survey conducted by Shanghai Metals Market (SMM).
Given Chinese leadership’s position of maintaining economic growth between 7% and 8% this year, copper demand is expected to remain stable. LME copper prices may hold above USD 7,000/mt given the buying on the dips. However, the fragile global recovery triggered concerns over supply glut in copper markets, undermining buying interest among copper consumers. This was reflected by lower purchases when LME copper prices rose above USD 7,300/mt. In this context, copper prices may continue to consolidate given caution prevailing in the market.
19% of producers were bullish, expecting copper prices will climb to USD 7,400/mt. With the Europe emerging from the recession and the US also recovering steadily, some export-oriented nations may see turnaround. Although China will unlikely sustain high growth, steady growth will still be witnessed. Meanwhile, market predictions are that a US default will not occur, which allow copper pries to test higher levels after the crisis is resolved.
10% of producers were pessimistic to copper price trends. Backwardation for spot copper dropped prior to the Chinese National Day holiday, which ascribed to selloffs caused by tight cash flow at the end of the quarter. However, spot copper market remained depressed, with liquidity conditions showing no sign of easing. In this context, most traders which have fulfilled their sales plans were unwilling to stock considerable goods. Besides, consumption is not expected to present noticeable increase in Q4, emplacing ceiling on any rise of backwardation for spot copper and hurting market confidence. The Fed’s QE tapering will also pose downside risk on copper prices. As a result, some producers believe LME copper prices may possibly fall below USD 7,000/mt.
The remaining 19% of producers were uncertain about the copper price outlook.
