46% China Industrial Insiders See Copper Prices to Stabilize This Week, SMM Survey

SHANGHAI, Mar. 22 (SMM) – SMM survey indicates that 46% Chinese copper producers expect stability for copper prices this week and they see LME copper to move between USD 5,000-5,080/mt and SHFE 1605 copper between 37,700-38,400/mt.

Crude oil prices broke through USD 40/bbl last week due to no rate hike decision by US Fed at its March meeting. But recent economic figures will not support crude price gains to sustain. Last Friday, crude prices fell back after rising first. US February core CPI issued last week increased 2.3%, a reflection of improving inflation. US February new home sales should be positive and Markit flash US March manufacturing PMI will likely rise marginally. Thus, US dollar will get support. But US dollar also meets resistance at moving averages. As such, copper prices should move at current level.

31% respondents note that LME copper will challenge USD 5,130/mt this week and SHFe 1605 copper will grow to RMB 38,400-38,700/mt. Risk appetite grows after US Fed decided to scale back its rate hikes and markets will continue digesting news of weaker dollar. US stock market extends gains for five weeks in a row and the S&P 500 index posted a gain of 1.4%. Besides, LME copper inventories continue falling and recorded an 18-month low of 158,275 mt as of last Friday. Backwardations on LME cash copper to LME three-month copper expanded from USD 18/mt last week to USD 26/mt this week and trend to widen further. CFTC reports that Comex net short positions were 547 as of March 15 while net long positions of LME copper grew almost 2,000 to 35,170 as of March 11. The PBOC injected RMB 130 billion cash to market through reserve-purchase agreement on Monday. Loose monetary policies continue in Chinese market. Chinese stock market also registered gains. Technical indicators also point upside for SHFE copper.

23% investors are bearish toward copper prices this week and they believe that LME copper will fall below USD 5,000/mt and SHFE 1605 copper to drop to RMB 37,000/mt. SHFE copper inventories hit 394,777 mt as of March 18 and China imported 328,604 mt of refined copper in February, a year-on-year rise of 55.66%. Continuous inbound flow of imports poses pressure on copper prices. China’s government releases new policies to cool overheated property market, triggering worries about economic bubble. Spot discounts widened in China after delivery of SHFE 1603 copper and downstream demand fails to improve notably. Operating rates at downstream copper semis producers are forecast to be 72.14% in March. Downstream buyers still expect price falls and are reluctant to enter market. This bodes ill for copper prices.