SHANGHAI, Oct. 23 (SMM) – Shanghai Metals Market (SMM) surveyed 24 copper smelters in China recently, finding that 38% of them expected copper prices will remain stable.
These smelters held that LME copper will continue to fluctuate between USD 7,150-7,250/mt. Market focus soon shifted to the US recovery and QE tapering following the resolution of the US debt ceiling crisis and reopening of the Federal government, with no major encouraging news expected in the near term. In China, copper consumption showed limited improvement so far in Q4. Meanwhile, copper producers may face tight financing by the end of the year and the possible delay in payments will prompt them to take orders selectively, allowing little chance for speculation. In addition, the persistent high return of banks’ financial products induced some enterprises to invest in these products. These factors will leave copper prices directionless and result in continued consolidation.
29% of smelters were optimistic, believing that the upbeat economic data from the US and Europe will continue to push up their stock markets. The economic upturn and resulting improvement in market confidence will benefit consumption of industrial metals. In China, Premier Li Keqiang commented that China’s growth will maintain at 7.5-7.8% in Q3 and Q4, and market is expecting more reform policies to be introduced at the Third Plenary Session of the CPC Central Committee forthcoming. Besides, despite oversupply pressure in copper market, prices found solid support, which was reflected by several failed attempts to dip lower. As a result, these smelters believed LME copper prices may rebound to test resistance at USD 7,400/mt.
25% of smelters were bearish, noting that the cold weather in north China during November may drag down copper consumption, exacerbating supply glut. Refined copper imports have been rising, while domestic copper output also remained high, driving down backwardation in China’s spot copper market during October. When combined with growing copper inventories expected in the short term, copper prices may be weighed down, with LME copper possibly breaking below USD 7,000/mt.
The remaining 8% of smelters were not clear about the price trends on the horizon.