ICSG: Estimated Supply Shortage of Global Copper Concentrates to be 151,000 Tonnes in 2017

[SMM Copper Foil Operating Rate Forecast] According to SMM forecast, the overall operating rate of the industry will reach 91.55% in June, rising by 1.24 percentage points MoM and by 16.77 percentage points YoY, with shipments expected to grow 2.48% MoM. The electronic circuit copper foil operating rate is expected to rise 0.22 percentage points MoM to 89.79%, and the lithium battery copper foil operating rate to rise 1.76 percentage points MoM to 92.44%. The residual heat of energy storage installation rush, high-level production of battery enterprises, and the transformation toward high-end capacity will support the industry operating rate to hold above 90%.

[SMM Copper Wire and Cable Operating Rate Forecast] In June, as the holiday factor fully fades, enterprise production orders resume, and the copper wire and cable operating rate is expected to rise slightly by 0.12 percentage points MoM to 72.45%, basically flat YoY. However, the industry will largely enter the traditional consumption off-season in June, with conventional terminal orders such as real estate and civil sectors generally weak, making a strong recovery difficult. The subsequent trend will mainly depend on the sprint of power grid projects landing at the end of Q2, together with the pace of copper price fluctuations, which will jointly determine the extent of industry demand and operating rate repair in June.

[SMM Shanghai Spot Copper] Looking ahead to tomorrow, SHFE copper prices are expected to rise intraday and remain at a relatively high level. Coupled with the futures contract rollover, trading activity is likely to be muted, reflecting that the current price level is significantly suppressing real demand. After the rollover, the market will officially price around the 2607 contract, and close attention should be paid to the outflow of unmatched warrants. However, open interest for the SHFE copper 2606 contract currently stands at approximately 5,500 lots, indicating limited delivery participation. The concentrated release of warrants is therefore expected to exert relatively limited additional pressure on spot discounts. Supported by delivery-related dynamics, Shanghai spot copper discounts did not see a sharp decline. But if copper prices remain at current highs and demand fails to improve effectively, spot premiums may come under downward pressure.