Half of Chinese Copper Tube/Pipe Producers Bearish towards Copper Price

SHANGHAI, Jan. 27 (SMM) – Half of Chinese copper tube/pipe producers hold bearish views over near-term copper price outlook, SMM finds in its latest survey of 20 producers.

The US dollar index rose sharply following the European Central Bank’s announcement of QE, and weak crude oil and euro zone economy are dampening sentiment.

Downstream consumption in China’s spot market cooled markedly after copper prices rebounded. Inflow of imported copper amid rising SHFE/LME copper price ratio will keep market supply ample. Besides, rising copper stocks on the LME and SHFE will prove a drag on copper price.

Another 10% expect copper price to consolidate, noting that LME copper should be trapped between the 5-day and 10-day moving averages. Positive sentiment from the introduction of “European QE” is fading, but crude oil has shown signs of stopping falling.

In China, some large processors went bargain hunting when copper prices plummeted, but purchases will gradually return to a buying-as-needed basis. However, cargo holders will be in no hurry to sell, helping offset the impact from waning demand.

5% of those surveyed are bullish, pinning their hope on pro-growth measures in China. China’s GDP grew 7.4% last year, and these producers believe the central government is likely to unleash more stimulus measures.

In addition, the State Grid announced that it plans to invest 420.2 billion yuan in power grid construction this year, up 24% from a year ago. This, together with acceleration in railway construction, will boost demand for the red metal.

On the technical side, copper prices have entered an upward track with the exit of short sellers.

The remaining 35% said they are not sure how copper prices will move.

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