The text of the research report
Macro: At present, the domestic and foreign policy cycles are just the opposite: China’s real estate downturn and loose interest rates, while the United States is due to high inflation and accelerated tightening, the US policy interest rate has also significantly exceeded China’s level in the same period.
The money supply represented by the interest rate level represents the financial environment of economic growth, which means that the demand in Europe and the United States may slow down further in the future, and the Chinese economy may lead the recovery in Europe and the United States.
Supply and demand: facing a small peak in copper mine supply for a long time: from 22 to 24 years, copper mines will have an annual supply growth of 5%, and the supply growth rate will be higher than the potential demand level of 3%, copper supply and demand will be slightly loose, copper concentrate TC will go up.
June to July: Due to the slow domestic recovery and the expected overseas economic recession, the destocking of the industrial chain led to a 30% drop in copper prices.
August to October: Since overseas demand, especially the US economy, did not really decline, the market returned to the Chinese demand recovery trading path, with a rebound of nearly 20%. In fact, the domestic demand for electrolytic copper watches in the third quarter was as high as 9%, and the processing orders continued in October, and China’s actual performance was relatively strong. In November, the increase in demand brought about by the continuous domestic stimulus and the decrease in demand after the sharp increase in overseas interest rates remained the focus of conflict.
Inventory: This week, domestic inventories increased by 15,000 tons to 115,000 tons, and copper inventories on the world’s three largest exchanges plus Shanghai Bonded fell by 32,000 tons to 206,000. Inventories are low.
Spread: Bonded bill of lading premium 135 US dollars / ton (+13 this week), Shanghai spot premium 168 yuan / ton (this week -200).
Opinion: Overseas aggressive interest rate hikes, weak demand expectations. In November, domestic copper scrap and smelting accelerated month-on-month growth, while copper processing remained stable and the supply and demand margin weakened. In the event, the LME’s delisting of Russian bronze deserves attention. Overall shock.
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