53% China Market Players Expect Copper Rallies This Week, SMM survey

SHANGHAI, Dec. 15 (SMM) – 53% Chinese copper producers see LME copper to grow to USD 4,700/mt this week and SHFE 1602 copper to rise above RMB 36,500/mt.

The People’s Bank of China will offer RMB 30 billion of 7-day reverse repurchase this week, injecting liquid in market. And positions for SHFE copper increased to about 20,000 on Monday. Shorts continue to exit SHFE copper market due to news of output cut and stockpiling in Chinese market, supporting copper prices. Ahead of the delivery date for SHFE 1512 copper, price gap between SHFE 1512 and 1601 copper still stays at RMB 340/mt. Shorts tend to close position for SHFE 1512 copper, boding well for SHFE copper prices. Moreover, net long positions return to gains in LME market since December and grew to 5,780 on December 4. CFTC report shows that as of the week ending December 8, net short positions for COMEX copper futures came in at 34,192, ending the five straight rises in net short positions.

See SMM Forecast, Please Click:LME copper to Search for Floor Next Week, SMM Says

Inventories both at home and abroad enter downstream track, mirroring downstream purchase at lows. As of December 11, SHFE copper inventories reduced 2,115 mt to 170,407 mt. LME copper inventories grew 750 mt to 232,675 mt, but still staying at a low level. Also, technical indicators also point upside.

41% respondents note that LME copper will move between USD 4,630-4,710/mt this week and SHFE copper will range RMB 35,400-36,300/mt. Currently, copper prices head for gains thanks to exit of shorts and longs have not showed signs of entering market. With copper price rally, cargo holders will likely buy on spot market and sell on SHFE market. This may depress copper prices. In China’s spot market, Chinese yuan depreciates continuously and SHFE/LME copper price ratio will rebound. Large number of copper imports flow into domestic market and sellers rush to sell at highs with growth in SHFE copper, growing supply in market. This will widen spot discounts, curbing copper prices. Effect from recent economic figures stays weak, which will give little guide to copper prices.

The rest 6% investors see LME copper to fall to USD 4,630/mt this week and SHFE copper to slip below RMB 35,400/mt. US Fed will announce its interest rate decision on Thursday and will well possibly raise interest rate, supporting dollar. Besides, crude oil prices extend losses due to oversupply and already dropped to USD 35.16/bbl, a 7-year low. Markets still see downside room for crude prices given US Fed’s rate hike. This bode ill for base metals prices.