36% of China’s Copper Wire Rod Makers Expect Prices to Consolidate, Holiday still Affecting Orders

SHANGHAI, Feb. 21 (SMM) – 36% of the 22 Chinese copper wire rod producers surveyed by SMM expected LME copper prices to hover at $7,100 per ton given mixed economic indicators and unimproved liquidity conditions which were believed to dampen trading.

Another 36% believed that LME copper prices would dip below $7,000 per ton, arguing that the net put positions on copper might weigh the market on. Chinese spot copper market would still experience great oversupply pressure given soaring copper imports and limited buying interest among cautious purchasers, which would also create downside risk to copper prices.

14% of the producers anticipated copper prices will rise to $7,250 per ton, as weakening US dollar and rallying US stocks, as well as rebound in precious metals would help bolster copper prices. LME copper stocks have fallen to about 300,000 tons, while the record high copper imports in January also eased concerns over sagging demand in China. These factors would drive a rebound in copper prices.

The remaining 14% of producers were not sure about copper price trends in the near term.

With respect to order books, 73% of producers surveyed told SMM the Chinese New Year holiday would cause a decline in sales in February. Tenders for electric wire and cable projects were not issued, and cold weather slowed progress of outdoor works, negatively affecting copper wire rod demand. The fewer number of working days and the holiday in February would also result in soft consumption.

27% of producers expected orders to remain stable in February, pointing out that many enterprises already closed for holiday in January, so production in February would unlikely fall sharply. Besides, as some rail transit construction projects remained in operation during the holiday, producers of rail transit contact wires reported stable orders in January and February.