36% China Industrial Insiders Expect Gains for Copper Prices This Week, SMM Survey

SHANGHAI, Mar. 15 (SMM) – SMM survey indicates that 36% Chinese copper producers are optimistic over copper prices this week. They expect LME copper to break through USD 5,000/mt and SHFE 1605 copper to grow above RMB 38,000/mt.

See SMM Price Forecast, Please Click:LME Copper to Consolidate at Highs Next Week

US crude oil prices have hit USD 40/bbl last week and technical indicators show signs of upward trend. Also, markets anticipate that US Fed will not increase Federal fund rate at its March rate meeting and US dollar index dropped 1.09% below 96. Weak US dollar will support copper prices. The PBOC used reserve-purchase agreements to inject RMB 115 billion to market last week with biding rate flat at 2.25%. China’s M2 supply increased 13.3% YoY in February, versus January’s 14% and expected 13.6%, and new RMB loans were RMB 726.6 billion, versus the expected RMB 1.27 trillion and January’s RMB 2.51 trillion. In the same period, social financing grew RMB 780.2 billion, below January’s RMB 3.42 trillion.

The ECB cut its interest rates last week, leading to looser currency market. Investment in real estate market development in China totaled RMB 905.2 billion during January-February, up 3% YoY in a nominal basis and with growth quickening 2 percentage points, NBS data showed. Fixed-asset investment (excluding rural households) was RMB 3.8 trillion, a rise of 10.2% YoY in a nominal basis. Bullish sentiment in property market will boost anticipation for demand for ferrous and nonferrous metals.

46% respondents see copper prices to move in current level this week with LME copper at USD 4,880-4,990/mt and SHFE 1605 copper at RMB 37,300-37,800/mt. Technically, SHFE copper meets strong resistance at RMB 38,000/mt and meanwhile finds support at RMB 37,000/mt.

18% market players are bearish towards copper prices and they believe that LME copper will fall below the 10-day moving average and SHFE 1605 copper will range between the 10 and 20-day moving averages. Destocking in Chinese property market and adjusting fast growth in house prices in first-tier cities will likely dampen ferrous and nonferrous metals prices. China’s industrial production growth slowed to a 7-year low of 5.4% and growth in consumption also decelerated to a 9-month low of 10.2%.

SHFE copper inventories headed for gains since the end of August and surged 14.8% on the weekly basis last week, nearly doubling those at the end of 2015. Mounting SHFE copper inventories reveal continuous flow of imported copper. Unwrought copper and copper semis imports were 420,000 mt at the end of February, slipping from 530,000 mt in December but still in a historic high level. Spot copper will invert to discounts again after the delivery of SHFE 1603 copper and by then cargo holders will likely sell goods for cash.