What Fuels Copper Price Surge? Will Gains Prove Sustainable? SMM Reports

SHANGHAI, Jun. 29 (SMM) – SHFE 1708 copper registered largest growth at 1.5% after opening on Thursday.

Xu Maili, Everbright Futures (EBF) Metal Research Director, attributes Jinchuan’s maintenance to the surge in copper price, in addition to big rise of ferrous metal prices and weakening US dollar index.  

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SMM senior copper analyst Ye Jianhua indicates that about 20,000-25,000 tonnes of copper output will be affected by Jinchuan’s maintenance, which is lower than market participation.

Hu Haibin, from Jiangxi Copper Futures Department, concludes three factors to the growth. First, impact from risky events, such as Brexit negotiation, has subsided, and US banks have passed stress tests, spurring market risk appetite. Second, hawkish comment from European Central Bank weighs down US dollar index. Third, downstream demand rises, while traders and downstream producers report insufficient inventories due to cash crunch.

Luo Liang, from SHZQ Futures, is confused on recent firm movement of copper price, in face of no big positive news from fundamental market, no shrink on spot discounts and stable inventory. On the consumption front, home appliance production will not see rapid increase, as inventory exceeds 40 million at present, despite of brisk consumption. As such, home appliance producers will hold current copper purchase unchanged. All industrial products prices are rising, which may raise market positive anticipation on economy in the rest of year.

Xu Maili expects copper price to stay firm in a month, but not to refresh new high.

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Cash market is not that tight as market predicted in June, shoring up copper price, Ye Jianhua says. Besides, rising ferrous metals, lead and zinc prices, and falling US dollar index also allow copper price to rise. However, copper supply is increasing, and consumption is likely to weaken, weighing down copper market.

Wu Yuxin, from First Futures, also sees limited upward strength on copper price with sluggish fundamentals. Wu attributes increasing bullesh bets to the price surge.

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