SHANGHAI, Feb. 3 (SMM) – 42% of Chinese wire & cable producers are still pessimistic about copper prices, SMM's latest survey of 21 producers shows.
These producers note that the euro may continue to weaken dragged by the European Central Bank’s QE, the Greek crisis, and appreciating Swiss franc. The US dollar index will be pushed up as a result.
Furthermore, LME copper inventories have been growing lately, hitting 225,375 tonnes last week. Meanwhile, the LME cash-to-three-month backwardation dropped to less than $5 per tonne, and short positions kept increasing with LME copper prices declining.
In China’s spot copper market, cargo holders will rush to sell to generate cash, while demand is expected to remain weak, leaving spot goods offered at discounts to SHFE 1502 copper contract.
10% of producers believe copper prices will remain range-bound in the short term, arguing that both longs and shorts will favor short-term operations, leaving prices directionless. Besides, markets have been tired of repeated reports on Fed’s monetary policy and China’s copper stockpiling, and new economic releases are limited. In this context, market is unlikely to experience sharp movements.
Another 10% hold that copper prices will rebound considering stock replenishments before the Chinese New Year holiday and buying support for distant-month contracts.
38% of producers are not sure about where the prices are heading.
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