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Will Report on China's Liquidity Injection Provide Continued Support to Copper Prices?

iconSep 22, 2014 16:22
Source:SMM
Report about the People's Bank of China (PBOC)'s liquidity injection caused copper prices to surge Tuesday.

Author: Paul Ploumis
19 Sep 2014 Last updated at 01:22:12 GMT
BEIJING (Scrap Monster): Report about the People's Bank of China (PBOC)'s liquidity injection caused copper prices to surge Tuesday. LME copper prices rose to $6,960 per tonne, and November copper on SHFE soared by 2% to 49,590 yuan per tonne during Tuesday's night session.

Sina.com said Tuesday night the PBOC is providing 500 billion yuan ($81 billion) of liquidity to China's five biggest banks through standing lending facilities (SLF). The SLF with tenor of three months is said to have an impact similar to a 0.5-percentage-point cut in RRR.

Will this news proffer impetus for copper to rise further? Some analysts from China's futures companies counseled caution.

"Despite the encouraging news, copper prices will still be affected by expectation of growing supply", analyst from Minmetals Futures said, "the weak market fundamentals will impose a ceiling on any further increase."

An analyst from Shanghai CIFCO Futures also warned about the influence of increasing copper concentrate supply, and remained relatively bearish towards copper prices for the medium term.

"Investors need to be wary of a correction following the sharp rise," analyst from Capital Futures said. "Besides, report on easing policies should exert limited influence on copper market against the backdrop of increasing supply and anemic demand," the analyst added.

Overall, investors are advised to remain cautious before PBOC's further move and the Fed's policy meeting.

Courtesy: Metal.com
 

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