SHANGHAI, Jun. 5 (SMM) – 48% of Chinese copper wire and cable producers expected copper prices to show limited changes for the foreseeable future, an SMM survey of 21 producers revealed.
These enterprises held that the tightening liquidity at mid-year would lower the likelihood of short squeeze, but continued decline in copper stocks in China might help support prices. The two factors were expected to leave copper consolidating.
19% of producers were bearish. Copper premiums in China have fallen to 200-320 yuan per tonne, while spot premiums for imported copper were also under downward pressure and might fall below $100 a tonne. The lower premiums were expected to impose a ceiling on any increases in copper prices.
Softening consumption would also add to a drag on copper prices.
9% of producers predicted that copper prices would rise, basing their opinions on falling LME copper stocks and anticipation of potential short squeeze. Copper stocks at LME approved warehouses were only around 170,000 mt by the end of May, while the ratio of canceled warehouse receipts climbed above 40%, pushing the cash-to-three-month backwardation in LME copper up to $99 a tonne. SHFE copper stocks also remained low, but positions in the front-month copper contract held elevated. As such, these enterprises believed chance still existed that copper prices may be driven up by short squeeze in June.
24% of the enterprises surveyed said outlook for copper prices was uncertain.