SHANGHAI, Dec. 22 (SMM) – 47% of major copper plate/sheet, strip and foil producers in China expect copper prices to consolidate in the short term, the latest survey of 21 producers indicates.
On the positive side, US economic recovery has been impressive recently. Expectations are running high for looser monetary policy in China after the recent Central Economic Work Conference.
On the downside, the US dollar index returned above 89 following the US Fed’s latest policy meeting. Chinese economy has slowed down. Besides, tightening year-end liquidity will undermine activity in SHFE copper market.
19% of these producers are bearish, arguing that slumping crude oil and weak market fundamentals will continue to weigh down copper prices.
Crude oil has crashed below $60 per barrel with little prospect of a turnaround.
Supply glut in China will worsen as refined copper production hit new high and since improving SHFE/LME copper price ratio will cause more imported copper to flow into the market. Meanwhile, downstream consumption will be sluggish due to cash shortage at the year’s end.
Another 10% anticipate a rally. SHFE copper is more resistant to declines than LME copper, and this situation will become more pronounced with the Christmas holiday drawing near.
The remaining 24% said they have no idea how copper prices will move.