[agency Review] Copper Mine strike affects expected easing of inventory Reconstruction in the American Market-Shanghai Metals Market

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[agency Review] Copper Mine strike affects expected easing of inventory Reconstruction in the American Market

Translation 10:02:29AM Jun 26, 2019 Source:Wenhua Finance and Economics
The content below was translated by Tencent automatically for reference.

SMM News: copper Market Logic:

Medium-term logic: the rigid increment of the global copper concentrate supply in the next 5 years is relatively small, while the elastic increment mainly depends on the price, and although the refining capacity is put in more, it is limited by the copper concentrate supply. The actual supply increment is not enough to cause the copper price to fall again. Therefore, the medium-term copper price bottom is expected to be obvious.

Short-term logic: in terms of waste imports, from the published situation of the first batch of six types of import enterprises, import management tends to be standardized rather than restricted, therefore, the impact is reduced; copper concentrate processing fees continue to fall, which continues to affect small and medium-sized smelting enterprises, which is expected to have an impact on output; On the demand side, from the leading indicators, the growth rate of China's power generation equipment investment in recent months is significantly higher than that of power grid investment. According to empirical estimates, there is a certain improvement in demand in the future. On the whole, the expected outlook of copper micro supply and demand level is improved, coupled with the moderation of the atmosphere of trade war, copper prices bottomed out. However, due to the less-than-expected impact of waste, and the resumption of production by short-term large smelting enterprises, coupled with the fact that the pattern of short-term demand has not changed, contracts will be relatively weak in recent months, and absolute copper prices will be repeated.

Trend analysis:

On the 25th, the discount of the spot market rose slightly lower than that of the last trading day, and the purchase of long orders basically came to an end, and from the point of view of spot transactions, the strength was relatively weak; downstream procurement was relatively limited; in addition, the current forward contracts rose slightly, the spot support capacity is not strong enough. The previous warehouse receipt recovered on the 25th, the spot market still maintained a rise, but the transaction in the long order delivery or into light, during this period the warehouse receipt is easy to repeat.

On the 25th, spot imports suffered a slight loss, and Yangshan copper rose to a steady level on the same day.

On the 25th, LME stocks fell by 1850 tons as a whole, mainly in warehouses in Asia and North America; COMEX stocks recovered slightly, and the inventory structure in the Americas changed, mainly due to the recent rebound in the COMEX/LME ratio, and has returned to the ratio level at its peak in 2016, indicating that confidence in copper prices has been restored in the American market and that COMEX stocks are expected to be rebuilt.

On the mining side, the management of Chuquicamata, a mining company owned by Chilean state copper Codelco, broke down in talks with three trade unions, who said on June 13 that they planned to go on strike on June 14 after Codelco failed to meet workers' expectations of medical costs and pensions. According to the latest news, union members can choose to rework voluntarily after 15 days of strike (June 29), and Codelco will propose a new agreement by June 27.

This means that the impact of the strike on supply is expected to be reduced.

In addition, the first quantum (First Quantum Minerals Ltd.) Its Cobre Panama copper concentrate was shipped out for the first time. The first ship transported 31000 wet tons of copper concentrate (8000 metal tons of copper). A second freighter carrying 44000 wet tons of copper concentrate (11000 tons of copper) is expected to set sail in the coming days.

On the whole, in terms of waste imports, from the situation of the first batch of six types of import enterprises announced, the import management tends to be standardized rather than restricted, therefore, the impact is reduced, and the processing fees for copper concentrate continue to fall, which has a continuing impact on small and medium-sized smelting enterprises and is expected to have an impact on output. On the demand side, from the leading indicators, the growth rate of China's power generation equipment investment in recent months is significantly higher than that of power grid investment. According to empirical estimates, there is a certain improvement in demand in the future. On the whole, the expected outlook of copper micro supply and demand level is improved, coupled with the moderation of the atmosphere of trade war, copper prices bottomed out. However, due to the less-than-expected impact of waste, and the resumption of production by short-term large smelting enterprises, coupled with the fact that the pattern of short-term demand has not changed, contracts will be relatively weak in recent months, and absolute copper prices will be repeated.

Key Words:  Copper  capacity  price forecast  output 

[agency Review] Copper Mine strike affects expected easing of inventory Reconstruction in the American Market

Translation 10:02:29AM Jun 26, 2019 Source:Wenhua Finance and Economics
The content below was translated by Tencent automatically for reference.

SMM News: copper Market Logic:

Medium-term logic: the rigid increment of the global copper concentrate supply in the next 5 years is relatively small, while the elastic increment mainly depends on the price, and although the refining capacity is put in more, it is limited by the copper concentrate supply. The actual supply increment is not enough to cause the copper price to fall again. Therefore, the medium-term copper price bottom is expected to be obvious.

Short-term logic: in terms of waste imports, from the published situation of the first batch of six types of import enterprises, import management tends to be standardized rather than restricted, therefore, the impact is reduced; copper concentrate processing fees continue to fall, which continues to affect small and medium-sized smelting enterprises, which is expected to have an impact on output; On the demand side, from the leading indicators, the growth rate of China's power generation equipment investment in recent months is significantly higher than that of power grid investment. According to empirical estimates, there is a certain improvement in demand in the future. On the whole, the expected outlook of copper micro supply and demand level is improved, coupled with the moderation of the atmosphere of trade war, copper prices bottomed out. However, due to the less-than-expected impact of waste, and the resumption of production by short-term large smelting enterprises, coupled with the fact that the pattern of short-term demand has not changed, contracts will be relatively weak in recent months, and absolute copper prices will be repeated.

Trend analysis:

On the 25th, the discount of the spot market rose slightly lower than that of the last trading day, and the purchase of long orders basically came to an end, and from the point of view of spot transactions, the strength was relatively weak; downstream procurement was relatively limited; in addition, the current forward contracts rose slightly, the spot support capacity is not strong enough. The previous warehouse receipt recovered on the 25th, the spot market still maintained a rise, but the transaction in the long order delivery or into light, during this period the warehouse receipt is easy to repeat.

On the 25th, spot imports suffered a slight loss, and Yangshan copper rose to a steady level on the same day.

On the 25th, LME stocks fell by 1850 tons as a whole, mainly in warehouses in Asia and North America; COMEX stocks recovered slightly, and the inventory structure in the Americas changed, mainly due to the recent rebound in the COMEX/LME ratio, and has returned to the ratio level at its peak in 2016, indicating that confidence in copper prices has been restored in the American market and that COMEX stocks are expected to be rebuilt.

On the mining side, the management of Chuquicamata, a mining company owned by Chilean state copper Codelco, broke down in talks with three trade unions, who said on June 13 that they planned to go on strike on June 14 after Codelco failed to meet workers' expectations of medical costs and pensions. According to the latest news, union members can choose to rework voluntarily after 15 days of strike (June 29), and Codelco will propose a new agreement by June 27.

This means that the impact of the strike on supply is expected to be reduced.

In addition, the first quantum (First Quantum Minerals Ltd.) Its Cobre Panama copper concentrate was shipped out for the first time. The first ship transported 31000 wet tons of copper concentrate (8000 metal tons of copper). A second freighter carrying 44000 wet tons of copper concentrate (11000 tons of copper) is expected to set sail in the coming days.

On the whole, in terms of waste imports, from the situation of the first batch of six types of import enterprises announced, the import management tends to be standardized rather than restricted, therefore, the impact is reduced, and the processing fees for copper concentrate continue to fall, which has a continuing impact on small and medium-sized smelting enterprises and is expected to have an impact on output. On the demand side, from the leading indicators, the growth rate of China's power generation equipment investment in recent months is significantly higher than that of power grid investment. According to empirical estimates, there is a certain improvement in demand in the future. On the whole, the expected outlook of copper micro supply and demand level is improved, coupled with the moderation of the atmosphere of trade war, copper prices bottomed out. However, due to the less-than-expected impact of waste, and the resumption of production by short-term large smelting enterprises, coupled with the fact that the pattern of short-term demand has not changed, contracts will be relatively weak in recent months, and absolute copper prices will be repeated.

Key Words:  Copper  capacity  price forecast  output