SHANGHAI, Jul. 22 (SMM) – 36% of Chinese copper smelters expect copper prices to hold steady in the near term, the most recent SMM survey reveals.
Despite increasing copper supply, the falling SHFE/LME copper price ratio and mounting uncertainty surrounding Indonesia’s copper concentrate exports will dampen copper imports in the future, lending some support to copper prices. However, a lack of any great news benefitting copper market means prices are unlikely to rise significantly.
30% of these smelters are bullish, holding that China’s economy has shown a sign of recovering with its Q2 GDP growing 7.5%. The Chinese government introduced more reform policies this year as compared with past few years. In addition, as the government is determined to achieve the 7.5% growth target for 2014, a more aggressive monetary policy is expected, which will allow copper prices to rise.
Another 30%, however, expect copper prices to fall. The amount of copper declared at the Customs houses increased after the SHFE/LME copper price ratio rose. Thus, SHFE copper stocks grew for a third week and set to rise further as large amounts of goods are delivered following the slump in SHFE 1407 copper contract prices on its last trading day.
On the other hand, copper consumption began softening in July, with spot discounts seen in China’s copper market, which reflected growing oversupply pressure. These negative factors, combined with LME copper flipping into contango, will leave copper prices under downward pressure.
The remaining 4% smelters are not sure where copper prices are heading.