Time: 2020-08-24 10:39:41 source: SDIC Anxin

    Recently, the copper market has been in high volatility, and the weakening of China's fundamentals has exerted pressure on the copper market. However, due to the continued weakening of the US dollar, the copper market can only fluctuate at a high level, and it also reached a new high at the beginning of the week. However, the minutes of the July meeting of the Federal Reserve released on Thursday morning showed that the Federal Reserve was not optimistic about the U.S. economic prospects, strongly recommended that the United States should continue its financial support, and expressed concern about the US fiscal deficit. In the case of worrying about the damage to the financial system, it did not consider formulating a yield curve for the time being. In the early stage, the United States failed to launch the fourth round of fiscal stimulus policy, and the current monetary policy is difficult to promote. The financial attributes have become loose, and fundamentals have become the driving force for copper prices to begin to fall.

    1. Foreign copper mines returned to normal, and domestic refined copper production began to increase

    Due to the high incidence of foreign epidemic in March and April, copper production was affected, especially in Peru, which made the global copper supply tense. The copper concentrate processing fee dropped from 70 US dollars in March to less than 50 dollars, which almost made the smelter no profit. In June and July, the maintenance of the smelter was obvious, and the monthly copper production was only about 740000 tons. However, since August, the smelter began to return to normal and the number of SMM was normal According to reports, domestic production will return to about 800000 tons.

    2. Copper scrap supply increased significantly

    Before May, the domestic scrap copper supply was extremely short, and the ratio of refined copper to waste copper dropped sharply. At one time, the price of scrap copper was the same as that of refined copper. However, with the increase of copper price, domestic scrap copper gushed out, and the ratio of refined copper to waste copper rose sharply. In mid June, the domestic scrap copper poured out, and the ratio of refined copper to waste copper rose sharply, reaching over 1500 yuan in mid June and 2800 yuan at the end of July. The substitution of refined copper for scrap copper completely disappeared, and even appeared the substitution of waste copper for refined copper. The operating rate of refined copper rod decreased and that of waste copper rod increased.

    3. Imported copper arrived in large quantities

    From March to June, the import window has been open for a long time. In addition, foreign copper mines have returned to normal since May, and domestic copper imports have increased significantly since June. In June, the import volume of non forged copper and copper materials was 656000 tons, with a year-on-year increase of 99%; in July, it was 762000 tons, with a year-on-year increase of 81.48%; in June, the domestic import of refined copper was 494000 tons, with a year-on-year increase of 127.6%. It can be seen that the domestic copper import volume will still double in July, and the trend of import copper in August will continue.

    4. Domestic consumption growth is likely to slow down

    The sharp rise in copper prices in the second quarter is directly related to the strong growth of domestic copper consumption. 5. Domestic consumption increased by 25% and 20% in June. However, since July, the consumption growth slowed to 7.4%, which is mainly because the power industry began to return to normal growth, and the growth of other industries also began to slow down. After the stimulation in the second quarter and the V-shaped reversal, copper consumption will return to the level of last year in the second half of the year.

    5. Domestic copper spot import profit and loss expanded

    Since the middle of July, the domestic import window has been closed, and the recent loss has expanded to more than 400 yuan. Analysis shows that a large number of imported copper has arrived, and the supply of scrap copper has increased, which are the reasons for the closing of the window. With the recovery of domestic production and the slowdown of consumption growth in August, the pressure on domestic fundamentals has increased. LME has maintained its price in the case of low inventory and high rising water, and the import loss is likely to further expand.

    6. Inventory changes

    Since the middle of July, domestic and foreign inventory began to differentiate, domestic inventory increased from 100000 tons to 173000 tons at present, and the tax declaration library also began to increase from 208500 tons to 233000 tons, but LME inventory continued to decline, and now dropped to 104000 tons. On the whole, the total inventory of the three exchanges plus China bonded warehouse has stopped declining since the end of July and has been fluctuating around 600000 tons.

    Compared with the current inventory of 35000 tons, it was 35000 tons higher than that at the end of last year. In terms of fundamentals, supply has returned to normal, but the United States is still in the epidemic situation. The economy and consumption are affected again. Copper consumption is difficult to return to normal level. Global copper fundamentals will remain weak. Before the United States continues to introduce stimulus policies, copper prices are likely to fall back under the influence of fundamentals.

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