SHANGHAI, Aug. 18 (SMM) – 30% of Chinese copper tube/pipe producers expect LME copper prices to remain around $7,000 per tonne for the foreseeable future, the latest SMM survey reveals.
These enterprises argue that bullish bets in copper still exceed short ones despite an increase in short positions, which will limit the moving range for copper prices.
20% of these enterprises believe copper pieces will fall to $6,800 per tonne or even dip lower, citing unimproved liquidity conditions at enterprises which hurt their profitability. Although the PBOC tends to push for lower mortgage rates, loans issued to housing markets are unlikely to increase sharply given rising bad debt ratio at commercial banks. In this context, property sector will remain bleak.
In copper markets, as supply tightness has eased noticeably, with bonded stocks flowing into Chinese markets and SHFE copper stocks on the upswing, spot copper was offered at discounts against SHFE front-month copper prices. This, combined with a lack of positive reports, will drag down copper prices.
15% of producers are still optimistic and predict LME copper will rise to $7,200 per tonne. China’s July lending data fell to the lowest since November 2009 and total financing dropped to a low never seen since October 2008 as well. Other credit data also presented slower growth, an indication that activities of shadowing banks were declining, which may take a toll on housing markets. Besides, the negative releases were also a sign that pro-growth measures failed to deliver significant results and that Chinese economy is still facing downside risk. This, in turn, raised hope for interest rate cut. On the other hand, copper consumption is expected to pick up after August, which will bode well for copper prices.
The remaining 35% of producers see no clear outlook for copper prices.