[minutes of SMM Morning meeting] safe-haven demand drives gold to new highs to limit the rise of copper prices.

Minutes of 7.21 Bronze Morning meeting

Macro: 1) the growth of new crown cases in the United States has slowed down, and early clinical trials of the vaccine jointly developed by AstraZeneca and the University of Oxford have yielded positive results. China's Kangxino Biological Vaccine and the vaccine jointly developed by Pfizer and BioNTech SE also reported good news on Monday. 2) in the new EU recovery Fund plan announced by European Council President Michel on Monday, the amount of money released in the form of free allocation is 390 billion euros, down from the original plan of 500 billion euros, and another 360 billion euros will be disbursed in the form of low-interest loans. 3) the people's Bank of China authorized the National Interbank loan Center to announce that the quoted interest rate (LPR) of the loan market on July 20, 2020 is 3.85% for 1-year LPR and 4.65% for more than 5 years, which is the same as that of last month and has been on hold for three consecutive months. [neutral] fundamentals: 1) the price of scrap copper in Guangdong was quoted at 45800 yuan / ton ~ 46100 yuan / ton on July 20, which was the same as that of the previous trading day. The price difference of refined copper was 2336 yuan / ton, which was narrowed by 315 yuan compared with the previous trading day. Copper prices are adjusted at a high level, but the overall situation is still good for the outflow of scrap copper, and the supply is improved compared with the first and second quarters, while the scrap copper pole operates under high load, the demand for scrap copper raw materials is strong, and the relationship between supply and demand remains tight. 2) the warehouse receipt quotation for imported copper on July 20 is US $92mur104 / ton, the average price is US $1 / ton lower than that of last Friday, and the average price of the bill of lading is US $80mur92 / ton, which is US $1.50 / ton lower than that of last Friday, QP August. LME0-3 rising water is 8 US dollars / ton, and the import loss is around 350 yuan / ton. On Monday, the import price weakened obviously, the loss widened to more than 300 yuan / ton, and both buyers and sellers performed poorly. The number of enquiries can be seen reduced, traders are not active in quotations, most said to maintain a wait-and-see state, waiting for the price to pick up. The quantity of unilateral offer in the warehouse is limited, and the price is relatively strong, but the transaction has not been heard of. 3) LME copper inventory decreased by 6275 tons to 151075 tons month-on-month on July 20, while copper warehouse receipt inventory increased by 636 tons to 65262 tons in the previous period. 4) spot East China: on July 20, Shanghai electrolytic copper spot quoted 50 to 110 yuan / ton for that month's contract, entering the long order delivery period this week, the disk also tends to be stable, and it is easy for spot copper to rise and fall. It is estimated that the spot water is 60 yuan / ton today-120 yuan / ton. South China: on July 20, the spot price of electrolytic copper in Guangdong province rose 50% to 90% of the monthly contract, with an average price increase of 5 yuan / ton. Guangdong inventory continued to increase after returning to Guangdong at the weekend. After more than a week of accumulation, Guangdong inventory is now approaching the 30,000 mark, returning to the level of mid-May. Affected by the increase in inventories and a slight drop in prices, the rising water in Guangdong rose slightly from last Friday. Overall, although copper prices fell slightly yesterday, but the downstream procurement desire is low, transactions are mainly concentrated between traders. We believe that unless there is a further decline in prices, the downstream procurement enthusiasm is not high, only to maintain on-demand procurement, there is still the possibility of continuing to accumulate reserves in the future. Copper price and forecast: last night, Lun Copper closed at US $6474.5 / ton, up 0.58%. The trading volume was 13000 lots, and the short positions were reduced by 3060 to 316000 lots. The Shanghai Copper 2009 contract closed at 51850 yuan / ton, an increase of 1.07%, and the trading volume was 72000 lots, and the long positions increased by 384 to 89000 lots. Copper prices rose and fell last night, breaking through the 6500 mark in the outer market and as high as 52340 yuan / ton in the inner market, but then a short-term pullback in copper prices recovered some of the evening gains. Yesterday, A shares recovered 3300 points, and the market expected the EU to reach an agreement on the recovery fund, the news led to an improvement in market sentiment and varying degrees of gains in risky assets. On the other hand, there has been a surge in new crown infections, with safe-haven demand driving gold to new highs and spot silver up more than 3 per cent, limiting the rise in copper prices to some extent. Copper prices are expected to continue to rise in the short term, driven by supply risks and capital. It is estimated that today Lun Copper 6470 won 6530 US dollars / ton, Shanghai Copper 51800 won 52200 yuan / ton.