SHANGHAI, Nov. 14 (SMM) – Only 27% of Chinese copper rod producers expected orders to grow in November, a Shanghai Metals Market survey revealed.
SMM surveyed 22 major Chinese wire rod producers, with capacities totaling 3.98 million mt, and found that 27% of the participants, mainly suppliers of thin wire, believed that end-users would build up stocks for exports at the end of the year, and this would increase orders in response. Moreover, demand from enameled wire, automobile wire and electronic wire would also improve after a slight drop in October, according to SMM survey.
55% of them are neutral over the outlook, believing orders will be virtually unchanged in November. In addition to the negative impact from colder weather, the decline in bidding projects and tight liquidity at the end of the year would prevent consumption late this year from expanding at the pace seen last year’s.
The rest 18% of producers believed orders would drop in November. Rising inventories of finished goods and payment delay would cause them to reduce production in November. Besides, the lack of a clear market direction and weak buying interest would also depress trading sentiment.
With regards to price outlook, 63% of the participants believed that copper prices would stage range-bounded trading. Copper inventories in Chinese markets were growing, but LME inventories were continuously falling, and with a high percentage of cancelled warrants, leaving market participants in a wait-and-see attitude to wait for a clear direction.
14% of producers expected copper prices to head for a new round of declines. Cash liquidity during Q4 would not improve significantly due to the rising CPI and year-end cash crunch at producers. Tight liquidity and weak demand will weigh down on copper prices.
9% of them were bullish over the price. The reform agenda released after the 3rd Plenary Session of 18th CPC Central Committee would boost market sentiment. Besides, a shift to spot premiums from spot discounts also cheered market confidence. The two would buoy up copper prices.
The rest 14% of them were unclear over the outlook.