original title:Shanghai Copper Expected to stabilize and rebound
Market sentiment release
Refined copper production in the fourth quarter is difficult to increase significantly, and short-term inventories will remain low. After the recent decline in the market, there is a demand for technical repairs in Shanghai Copper, and the market outlook will be dominated by an oscillating rebound. The pressure on the main contract will be at 72750 yuan/ton.
The picture shows China’s refined copper output (unit: 10,000 tons)
After entering late October, dragged down by the market atmosphere, the main contract price of Shanghai copper fell below the 70,000 yuan/ton mark. With the release of panic, the Shanghai copper plate is showing signs of stabilization.
Copper concentrate processing fees rebounded
Chile is the world‘s largest copper producer. With the Chilean government’s gradual relaxation of nationwide epidemic prevention and control measures, the Chilean epidemic has recently rebounded. From the perspective of copper production, due to the strike of Codelco’s Andina copper mine from August to September, Chile’s copper output in September was 447,400 tons, down 7% from the same period last year, and the recovery progress did not meet expectations. Peru’s copper production in September was 202,700 tons, an increase of 17.6% year-on-year and a decrease of 0.1% month-on-month. At present, disturbance events still occur from time to time. On October 31, Glencore and BHP’s Antamina copper-zinc mine in Peru issued an announcement stating that the operation of the mine was suspended due to residents’ blockade of nearby roads. On November 3, Antamina signed an agreement with the Aquia community to stop protests. On the whole, the current supply-side production of copper mines is gradually recovering, and TC is slowly climbing. In 2021, global copper concentrates will continue to maintain a tight balance pattern, and the gap is expected to narrow compared to 2020.
The domestic electrolytic copper production in September was 885,000 tons, an increase of 2.4% year-on-year and a month-on-month increase of 1.26%; China’s electrolytic copper production is expected to be 846,200 tons in October this year, a year-on-year decrease of 2.8% and a month-on-month increase of 1.9%. From January to October, the total output of electrolytic copper was 8.517 million tons, an increase of 5.2% year-on-year. At present, the supply and repair of domestic smelters are hindered. While the impact of electricity curtailment on the input of copper concentrates in smelters has expanded, unexpected extensions of maintenance have also reduced copper concentrates. Of feeding. We are not optimistic about the production of refined copper in the fourth quarter. Under the influence of domestic power curtailment and the arrival of the southwest dry season, refined copper production is difficult to increase significantly. China’s electrolytic copper production is expected to increase by 500,000 tons to 9.8 million tons in 2021, a growth rate of 5.4%. The smelting capacity in 2022 will usher in the end of this round of expansion peak.
Significant year-on-year increase in imports
Starting from November 1, 2020, the policy for recycled copper raw materials will be officially implemented. The new policy allows the free import of high-quality copper scrap that meets the standards, and no longer restricts the processing system that import companies must have, and is no longer restricted by the number of approvals. As a result, imports of recycled copper have surged this year. From January to September this year, my country imported 1.23 million tons of recycled copper, an increase of 85.08% year-on-year. In September, the import of recycled copper (including brass) raw materials totaled 134,400 tons, a month-on-month increase of 3.6% and a year-on-year increase of 60.2%. Recently, the government has stepped up its efforts to regulate bulk commodities. Holders still have a strong reluctance to sell even when copper prices are falling, while scrap manufacturers have adopted a moderate purchase strategy at a low level, and the overall transaction situation is not good.
Grid investment is expected to accelerate
After the price of main copper materials in this round fell below 71,000 yuan/ton, the terminal industry’s willingness to receive goods increased, and the number of orders increased. Cable companies said that in addition to the increase in engineering installation orders such as real estate, power bureaus, and factory construction, Retail orders also increased slightly. In general, the current progress of power grid investment is obviously lower than expected. Taking into account the seasonal influence of power consumption, power grid investment is expected to accelerate in the fourth quarter.
On the macro level, the global economy is currently in a stagnant situation. The Fed is more likely to achieve its job market improvement and economic recovery goals in the middle of next year, and the rate of interest rate increase may not be too slow than current expectations. Fundamentally, despite the continuous release of overseas mine production capacity and the improvement of the global copper concentrate supply situation, under the background of severe global energy risks, the tone of tight supply has not changed. In the later stage, we will pay attention to the changes in sea freight and whether the shipping terminal can operate normally. Domestically, refined copper production in the fourth quarter is difficult to increase significantly, and short-term inventories will remain low. Downstream consumption is weaker than previous market expectations, and power grid investment is expected to start in the fourth quarter. In general, after the recent decline in the market, Shanghai Copper has a demand for technical repairs. It is expected that the market outlook will be dominated by an oscillating rebound. The pressure on the main contract will be at 72750 yuan/ton. (Author’s unit: China International Futures)
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