SMM11 March 30: entering November, the center of gravity of copper in Shanghai has slowly moved up. Starting in the middle and late ten days, the rise in copper in Shanghai has accelerated. Today, copper in Shanghai has risen 3.72 percent, reaching a daytime peak of 57790 yuan / ton to close at 57680 yuan / ton, a monthly increase of 12.7 percent.
"[market voice] Shanghai copper rose more than 3.5%, a new high in nearly seven years, and the market continues to be bullish on copper prices.
"Click apply to view the SMM metal industry chain database
Since November, macroeconomic data at home and abroad have warmed up. China's economy has steadily recovered and the manufacturing sector has improved again. China's manufacturing purchasing managers' index (PMI) in November was 52.1%, up 0.7% from the previous month; China's non-manufacturing business activity index (PMI) was 56.4%, up 0.2% from the previous month; production and demand were booming, and related indicators reached a high for the year. This month's production index and new order index were 54.7% and 53.9% respectively, up 0.8% and 1.1% respectively from the previous value, and 1.78% and 2.24% higher than the average for the same period in the past five years, indicating that the current manufacturing production and demand are relatively optimistic and are located in a higher economic range. Overseas Pfizer and Moderna vaccines have sprung up, and the global vaccine is expected to accelerate its landing. Last week, due to novel coronavirus's vaccine progress, President-elect Biden's formal approval for the transfer of power, and the sharp increase in the initial value of PMI in the United States, the market's optimism about economic recovery was further strengthened. Fed policy makers discussed how to adjust their asset purchases at their November policy-making meeting, hinting that they might strengthen QE, to provide more support to markets and the economy at the December meeting, adding optimism at the monetary level.
The tight supply side remains the same, and Chilean copper production will reach 5.82 million tons this year, up 0.6 per cent from a year earlier, according to Victor Garay, the Cochilco mining market coordinator. Copper production will reach 5.99 million tons by 2021, up 3% from a year earlier; in addition, Marco Riveros, executive vice president of Cochilco, expects a shortage of 26000 tons in the copper market this year and a surplus of 220000 tons by 2021.
"Cochilco: will face severe challenges if the new expansion project fails to advance Chilean copper production as scheduled.
Scrap copper ports, the reduction of scrap copper imports in October and the increase in environmental protection in the domestic heating season have affected some downstream and dismantling work, reduced scrap output and intensified supply tensions.
[SMM analysis] scrap copper imports fell sharply by 15.96% in October. Supply improvement depends on recycled copper imports.
On the import and export side, the import window opened last week, and copper stocks in the Shanghai Free Trade Zone decreased by 2700 tons to 367000 tons month-on-month. Copper imports are expected to flow in this week, and bonded warehouse stocks are expected to continue to decline. Today, the import price ratio continues to improve, and the high price of spot imports in domestic trade keeps spot imports profitable and boosts import demand. recently, the bill of lading in Hong Kong is in short supply, and traders are reluctant to sell and quote high prices for scarce goods. The buyer appropriately raised the price expectation, the price of the bill of lading rose in light trading, and the price of the warehouse receipt also rose sharply.
Copper inventory in China Free Trade Zone (in 10,000 tons)
"Click apply to view the SMM metal industry chain database
Last Wednesday, the stock of copper in the society was removed to 13300 tons. Although the rate of removal has narrowed somewhat, it has dropped to 205400 tons after going to the warehouse for seven consecutive weeks. Today, the spot market is hit by the straight-line surge of the market, the market is generally on the sidelines, and the fear of heights is spreading. Plus the last trading day at the end of the month, the deal was deadlocked.
In terms of downstream consumption, refined copper rods are affected by the sharp rise in disk surface, resulting in a significant decrease in orders. From the enterprise research office, although the downstream cable plate orders are mediocre, there is a slight pick-up in October orders. The sharp rise in copper futures prices has aggravated the wait-and-see mood of downstream customers. Many enterprises said that downstream cable customers have suspended delivery and wait and wait; in terms of cables, orders for the national network picked up slightly in the fourth quarter, but the growth rate was not obvious. In addition, due to the weather, the consumption in the north will be reduced, which will have a certain impact on the order growth of cable enterprises. Among them, most of the enterprises in Xinjiang have entered the production plan to reduce production and stop production, and production is expected to start again at the beginning of spring. In terms of price, due to the certain pressure on the capital flow of some enterprises, the sharp rise in copper prices has a great impact on orders, but special cables such as overseas construction machinery cables and submarine cables are still stable; enamelled wire orders are also greatly affected by the rise in copper prices. Downstream customers' wait-and-see mood is significantly higher than last week, but from the consumer demand, orders from power tools, home appliances plate is still very stable; The price advantage of scrap copper rod is obvious, the orders of most enterprises are hot, and the inventory of finished products is reduced obviously.
[copper weekly survey feedback] Copper prices have continued to break this week and the operating rate has stabilized as a whole.
Soochow futures Zhang Huawei said that at present, the global economy is still in the stage of sustained recovery, and monetary policy in Europe and the United States is still in the expansion cycle. As the novel coronavirus vaccine is expected to be gradually widely used, the impact of the epidemic on economic and social life will further decline next year, and with the strengthening of fiscal policies in Europe and the United States next year, the demand for basic metals is expected to rise further. On the other hand, the supply side is still rigid in the short and medium term, and the contradiction between supply and demand is expected to further intensify. As the Fed monetizes its debt, the dollar is expected to remain relatively weak. It is expected that the strong trend of copper and aluminum prices will continue into the first half of next year. In the futures market, we recommend that the original copper and aluminum long position can still be held, and downstream companies actively buy hedging whenever there is a pullback. In terms of stock investment, we suggest that we should focus on companies listed in copper and aluminum that have better corporate governance, stronger performance flexibility and more resource reserves, and mainly recommend Zijin Mining, Jiangxi Copper, Shenhuo shares, Yunnan Aluminum shares and other enterprises.
SMM believes that the overall trend will rise first and then decline towards the end of December. Technical indicators have formed a platform breakthrough in the short term and will continue to rise, but in late December, due to problems such as the return of funds at the end of the year, it is expected that some bulls' short-term profits will lead to a small adjustment in copper prices. Shanghai Copper is expected to operate at 56000-60000 yuan / ton, Lun Copper at 7350-8000 US dollars / ton, and BC Copper at 49900-53450 yuan / ton.
"[institutional consultation] how promising is it for Shanghai Copper to break the silence in the future?
