SHANGHAI, Mar. 6 (SMM) – Chinese copper wire and cable producers became increasingly cautious towards copper prices outlook against continuous falls in copper prices, an SMM survey of 20 producers showed.
35% of these producers expected copper prices to fall to 48,000 yuan per tonne. Home sellers in some Chinese cities dropped prices for sales, igniting concerns over money shortage and cash crisis of trust businesses in property sector. This occurred at the same time when the Chinese yuan kept weakening, sending jitters through the market.
The People’s Bank of China continued to drain liquidity from the market, placing financial pressures on traders and downstream buyers in physical copper market. With suppliers in a rush to sell and buyers refusing to act, China’s copper market experienced great oversupply pressure. In this context, prices would dip again.
30% of enterprises predicted copper prices might hold steady above 49,000 yuan per tonne, given mixed economic data and vacillating US dollar.
In China’s spot markets, downstream buyers started sourcing goods after prices fell below 49,000 yuan per tonne, causing contango to narrow. Suppliers would be in no rush to sell as financial pressures ease at the beginning of March.
That said, market players might revert to a wait-and-see posture during the NPC and CPPCC sessions, which would leave copper prices consolidating.
5% of those surveyed still anticipated copper prices would gain some ground to rise to 50,000 yuan per tonne, due in part to a hopeful technical rebound.
These producers expected copper consumption to pick up in March. Combined with a weaker RMB which expanded losses for copper imports and encouraged smelters to export copper, oversupply pressure in China’s copper market would ease slightly.
SHFE copper stocks began falling after a post-holiday spike. Crude oil and gold prices also gained traction from the Ukraine crisis. These factors were expected to help with a rally in copper prices.
30% of the respondents saw no clear trend for copper price movements.
All these wire and cable producers foresaw recovering orders in March, due to recovering consumption and labors returning to work.
The stabilizing copper prices might also encourage downstream buyers to build stock for high demand season in Q2.