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[SMM analysis] can the rising trend of copper in Shanghai continue?
Jun 21,2019 16:50CST
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Source:SMM
The content below was translated by Tencent automatically for reference.

SMM, June 21 / PRNewswire-Asianet /-

The leaders of China and the United States exchanged phone calls, the Federal Reserve's resolution was more dovish, and expectations of a rate cut in the United States were even stronger. The macro news is good. When we hear that the metal market is turning red both inside and outside the metal market, Lun Copper is close to US $6000 / ton, and the high level of Shanghai Copper 1908 contract has also broken through 47000 yuan / ton. The story of the recent copper mine contraction has emerged one after another. Scrap copper is also limited by the supply of scrap six categories of restrictions, all of which give support to the spot price of Shanghai copper. Can Shanghai copper continue the upward trend?

First of all, the Shanghai Copper Index, June 19 jump high open, its mainly due to macro positive reduction of 16000 hands, bullish active product is extremely low. On June 20, Shanghai copper increased its position by 2000 hands, and the overall center of gravity moved up slightly, but the high level of 46990 yuan / ton did not break through the highest level the day before. The macro news is a short-term stimulus, and the market is still cautious. The final factor determining copper prices will still be the fundamentals.

 

According to SMM research, on the supply side, only waste enterprises with approval documents can import "waste six categories" on July 1. On June 20, the solid waste Center announced that some of the waste enterprises in Zhejiang and Anhui have received approval documents, and the total amount issued is basically the same as the import of six types of copper scrap in the third quarter of last year, with a reduction of seven categories of scrap copper. It is expected that the impact of copper scrap imports in the third quarter is not large. However, the domestic refining capacity has been expanded more, the new copper industry in Nanguo and Southeast Guangxi has been put into normal production, the domestic rough maintenance has been reduced, and the market supply has increased. The amount of scrap copper has been compared with the import of scrap copper. The reduction of scrap copper is far less than the increase in the supply of electrolytic copper, and the market supply is sufficient, and the supply of electrolytic copper is expected to increase by 60-700000 tons in 2019.

However, on the demand side, June has entered the copper consumption off-season, terminal orders decreased, especially after the rise in futures prices in the past two days, the spot market transactions show a stalemate. Copper enterprises also have feedback, terminal enterprises due to the pressure of poor consumption to reduce copper processing fees more. Recently, the state has vigorously promoted special bonds to promote infrastructure investment. On June 19, the State standing Committee proposed to speed up the transformation of old urban areas and complete all the transformation and upgrading tasks clearly defined in the 13th five-year Plan one year ahead of schedule. All of them are measures to promote the development of infrastructure and electricity, but according to the understanding of SMM, the copper consumption of the above projects still needs to follow up the actual situation, and the pulling effect on copper prices has yet to be confirmed.

Therefore, in the short term, we still pay attention to the talks between the leaders of the two countries at the G20 summit. Recently, because of the good macro, Shanghai Copper is operating strongly in the short term, but SMM believes that the upward space of Shanghai Copper is limited, the supply of electrolytic copper is sufficient in the third quarter, and the demand is reduced. Then it is expected to enter the accumulation stage. In the long run, Shanghai Copper will still be pulled back.

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