SHANGHAI, Oct. 28 (SMM) – 24% of Chinese copper wire rod producers are bearish toward copper prices citing gloomy economic prospects and poor market fundamentals, the recent SMM survey of 21 producers reveals.
Global economic outlook, especially euro zone economy, is worrisome. Copper supply in China is plentiful due to the inflow of imported copper after SHFE/LME copper price ratio improved and high operating rates at Chinese copper smelters. Cash squeeze deterred fabricators from buying copper. The expected decline in 2015 term copper premiums for buyers in China also reflects weak copper demand.
Still, another 24% see copper prices to consolidate. On the downside, China’s refined copper supply remains in surplus. But on the bright side, the introduction of stimulus measures and the recent upbeat economic data have shored up market sentiment, which will put a floor under copper prices. The US dollar index will move sideways and US stock markets will stage no volatile movement, also keeping copper prices in check.
14% of those surveyed have painted a rosy picture. They argue that some fabricators will ramp up production to fulfill full year production goals, which will boost copper demand. Additionally, positive Chinese and US economic data and stimulus packages in major economics will also lift copper demand.
The remaining 38% said they are not sure about trends of copper prices.