43% China Industrial Insiders See Copper Prices to Fall This Week, SMM survey

SHANGHAI, Dec. 1 (SMM) – Copper prices posted rallies last week thanks to output cut news but fell back later due to firmer dollar. And LME copper stayed weak during Asian trading hours on Monday. Will copper prices head for gains or losses this week? SMM survey shows the following:

43% respondents see LME copper to fall below USD 4,500/mt this week and SHFE 1601 copper to drop below RMB 34,000/mt. Firmer dollar weighs on copper prices. Markets expect more easing to be released by the Europe Central Bank on Thursday and non-farm payrolls due out Friday should not be soft, boosting bets for rate hike next month. US dollar may challenge the March’s high of 100.42. Besides, US crude oil prices are likely to extend weakness due to oversupply as output cut agreement possibly will not be reached on December’s OCPEC meeting.

See SMM Forecast, Please Click: LME Copper to Rise Next Week, SMM Predicts

Economic slowdown in China will also depress copper prices. China’s official manufacturing PMI came at 49.8 in October, below expected 50 and hitting the second low this year. Investors expect November’s official manufacturing PMI to remain below 50. Chinese economy is predicted to head for losses in Q4, reducing demand for copper. Copper processors are pessimistic over future copper prices on the back of overcapacity and poor demand.

22% market players believe that LME copper will up to USD 4,690/mt this week and SHFE copper will break through RMB 35,400/mt. Production cut news improve market sentiment. As of November 27, LME copper inventories fell 1,450 mt to 243,350 mt. Also, technical indicators point upside. Those factors will support copper prices.

The rest 35% investors point out that LME copper will move between USD 4,500-4,690/mt this week and RMB 34,000-35,400/mt for SHFE copper. Positions for all SHFE copper contracts stay above 750,000. Technically, both LME and SHFE copper meet resistance at the 20-day moving average but meanwhile find support at the 5 and 10-day moving averages. In China’s spot market, copper prices fell to recent low while on the other hand, downstream hunt for goods at lows. Operating rates stay steady at domestic copper processors at the end of this year, SMM survey. Weak consumption will not push spot premiums and should cargo holders are willing to sell with widening discounts, speculators will likely buy in spot market and sell in SHFE market.