SHANGHAI, Feb. 10 (SMM) – 43% of Chinese copper wire rod producers paint a dismal picture over near-term copper price outlook, SMM's latest survey of 21 producers shows.
Falling CPI and PPI in the euro zone indicate growing deflationary pressures in the region. Political situation in Greece remains unstable. HSBC’s China manufacturing PMI pointed to contraction in manufacturing activity in the world’s second largest economy. Shiny US economic data kept the US dollar firm. A growing number of copper processors will close with the Chinese New Year holiday just around the corner. Copper stocks across China’s major trading markets rose significantly heading into 2015, highlighting heavy oversupply pressure. These factors are believed to combine to weigh down prices.
Another 19% expect copper prices to enter an upward track. Rumors are running wild that the State Reserve Bureau (SRB) would buy copper. Crude oil rebounded. Acceleration in China’s infrastructure construction will boost copper demand. Short sellers may exit before the upcoming holiday. A growing number of investors have opened long positions in distant months copper contract on the SHFE, boding well for the red metal.
Still, 19% of those surveyed expect copper prices to consolidate. Weak economy in Europe and emerging countries and interest rate cuts in major economies will keep copper prices in check. The impact of the US dollar on commodity market is weakening. Intense game between short sellers and long buyers will also keep copper prices steady.
The remaining 19% said they have no idea what direction copper prices will head for.
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