Bearishness Prevails in Copper Market This Week, SMM Survey

SHANGHAI, Nov. 24 (SMM) – SMM survey shows that 20% industrial insiders expect copper prices to head for stability this week with LME copper moving at USD 4,400-4,580/mt and SHFE 1601 copper at RMB 32,000-34,500/mt.

See SMM Forecast, please click: LME Copper to Trade at $4,500-4,680 per tonne This Week, SMM Predicts 

First, copper prices usually fell by 10-15% at the end of recent three years while copper prices already dropped 12% in November this year, leaving limited downside room in short term. Second, investors enter SHFE market continually after a slump in copper prices. Position opening at Jinrui Futures reached 60,000, mainly by downstream buyers. Besides, some large producers enter market with prices at lows. Third, technical indicators enter an overselling territory. According to COMEX report, positions opening by longs are above shorts.  

The rest 80% respondents remain bearish and they note that LME copper will fall below USD 4,400/mt this week and SHFE copper slip to RMB 32,000/mt. Expectation for US Fed rate hike in December gets boost following the October FOMC policy meeting. US dollar grows near 100 while crude oil prices are weighed on.

Economic figure for October from China come into stream gradually following the 6.9% growth in Q3’s GDP. Cash flow slowed despite pro-growth measures released by the People’s Bank of China. Downstream demand stays weak and the latest average operating rate edges down.

As for the fundamental, Glencore, Codelco and Freeport all announced production cut this year but those new capacity will come online soon, including Buenavista, Grasberg DMLZ project, Cerro verdeand expansion project and Lasbambas. Also, domestic smelters also plan to expand capacity. Those factors will weigh on copper prices.