SHANGHAI, Apr. 13 (SMM) – 50% of Chinese copper wire rod producers predict that copper prices will be trapped in the current range in the short term citing co-existence of resistance and support for SHFE and LME lead prices, SMM's most recent survey of 20 copper wire rod makers shows.
Besides, total positions in SHFE copper were around 810,000 and LME copper positions hit 380,000, with both long and short positions holding up. In spot copper market, cargo holders abstained from selling at lows and buyers were also cautious towards purchases. These factors combine to point to a range-bound copper market.
20% of respondents are optimistic partly considering improving economic indicators for March, a pullback in the US dollar index, and sufficient money supply. In addition, the CFTC reported a decrease of net short positions in COMEX copper to 4,154 for the week ending March 31, and long positions in LME copper grew to 31,076 of the week ending March 27.
As for market fundamentals, the share of imported copper supply in Chinese copper market declined. This occurred at the same time when Chinese copper smelters refrained from selling and downstream buyers started purchasing, which may herald further climb in copper prices.
10% of producers remain bearish, arguing that the price increase may prove unsustainable due to slow recovery of operation downstream. Operating rates at copper processors declined slipped more than 5 percentage points on the year in March. SHFE copper stocks increased to 246,656 mt in the week of March 30-April 3.
Moreover, Goldman Sachs said in a report that depressed housing starts in China will bode ill for its copper consumption. The new measures recently introduced to cheer up housing demand may have limited impact on housing construction, which was reflected by the weak prices of rebar and iron ore.
These producers also noted that the US dollar will remain strong for the long run, and the stubbornly high crude oil inventories will drag down crude prices, in turn pressuring copper prices.
The remaining 20% see no clue for copper prices movements in the short term.
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