SHANGHAI, Dec. 29 (SMM) – SMM survey shows that 50% Chinese market players are bearish towards copper prices and they expect LME copper to fall below USD 4,610/mt this week and SHFE 1603 copper will slip below RMB 35,500/mt. SHFE 1602 copper ended Monday at an intra-day low and LME resumes trade on Tuesday after closing for 2.5 days. LME copper will fall today with declines more significant compared with SHFE copper due to depreciation in Chinese yuan, triggering bearishness in market. On the macro side, European and US markets are lacked in major reports. US dollar returned to downside track after finding support at the 60-day moving average and crude oil prices slumped again.
See SMM Price Forecast, Please Click:LME Copper to Rise Further Next Week
Profits fell continuously at Chinese above-scale industrial enterprises issued last weekend but finished product inventories grew at a faster pace. This means that domestic producers’ growing operating rates and stock building are largely due to low copper prices instead of improving fundamentals, which even makes markets digest the consumption expectation in advance. Producers report cash crunch at year’s end. The PBOC injected net capital into market for two straight weeks but the Shibor went up in short trem, when combined with slump in Chinese stock market, market sentiment will be depressed. Also, market stays quiet at year’s end and domestic latest production hit a new high with imported copper filling market, weighing on copper prices.
Another 50% see LME copper to range USD 4,610-4,730/mt this week and SHFE 1603 copper to move between RMB 35,500-36,200/mt. There are only four trading days in Chinese market with soft sentiment and thus copper contracts will unlikely fall significantly. SHFE copper dropped below the 5, 10 and 40-day moving averages on Monday but finds support at the 20-day moving average. Previously, the contract also tested the 20-day moving average for several times. China’s PMI is due for release this weekend and should the PMI stabilize or pick up, market sentiment will also improve. Depreciation in yuan will support domestic copper prices to some extent and compared with yuan in cash, ETF is a better choice, which will support SHFE copper prices.