About 42% of Chinese Market Players See Copper Prices Fall This Week, SMM Survey

SHANGHAI, Feb. 2 (SMM) –About 42% of Chinese market players surveyed by SMM see copper prices fall this week.

See SMM forecast, please click: LME Copper to Build Upward Momentum Next Week  

These pessimists expect LME copper to fall below USD 4,500/mt and SHFE copper to test support at the 10-day and 20-day moving averages, citing a series of negative factors: First, China’s official manufacturing PMI hit its lowest since August 2012 at 49.4 in January, and below 50 for six months in a row. Caixin’s China’s manufacturing PMI, though better than expected, was below 50 for 11 months in a row at 48.4 in January. Second, US crude oil prices returned to declines on Monday, reflecting persistent oversupply, and are expected to fall further without production cut news. Deutsche Bank sees crude oil prices remain under downward pressure, citing growing stocks in the US and high imports. Third, suppliers in domestic spot market will be eager to sell to avoid carrying stocks through the week-long 2016 Chinese New Year holiday. But demand will be poor as most downstream producers have closed early for the holiday.   

Another 46% expect SHFE copper to consolidate at RMB 35,300-35,700/mt and LME copper at USD 4,500-4,560/mt for the following reasons. First, both longs and shorts will be cautious ahead of the holiday. Second, the US dollar index will remain high at above 99 on optimism over US non-farm data, which will keep copper prices in check. 

The rest 12% are bullish that SHFE copper will break through RMB 35,800/mt and LME copper will rise above USD 4,560/mt, citing several negative factors: First, CFTC reported showed net short copper positions on the COMEX fell to 36,827 in the week ending January 26. Second, some speculators will stockpile goods in spot market, out of optimism over post-holiday consumption and upcoming delivery date of SHFE 1602 copper contract.