Minutes of SMM Bronze Morning meeting on July 31

[7.31 SMM Bronze Morning minutes] Macro: 1) British Prime Minister Johnson said that the UK would leave the EU on October 31 anyway, any agreement must remove the guarantee scheme, and the UK would never carry out physical inspections or infrastructure construction of the Irish border. (2) US personal spending rose 0.3 per cent in June from a month earlier, down from 0.4 per cent. The US PCE price index rose 1.4 per cent in June from a year earlier, down from 1.5 per cent. Us consumer spending and prices rose modestly in June, indicating slowing economic growth and moderate inflation, and the Fed is likely to cut interest rates this week for the first time in a decade. 3) the political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and make arrangements for economic work in the second half of the year. It is necessary to implement a positive fiscal policy and a prudent monetary policy. We should make greater efforts to improve fiscal policy and continue to implement the policy of reducing taxes and fees. Monetary policy should be tight and moderate, and liquidity should be kept reasonably abundant.

Fundamentals: 1) scrap copper: yesterday refined scrap price difference of 1432 yuan / ton. According to SMM statistics, in June 2019, China's imports of scrap copper equivalent to 150300 tons of metal, a sharp increase of 35.70 per cent compared with the same period last year. In the first half of 2019, China's cumulative imports of scrap copper increased by 106200 tons compared with the same period last year. From this we can see that imports of scrap copper did not tighten in the first half of the year. The sentiment of domestic stockholders has eased somewhat, but the light pattern of consumption in the lower reaches has not changed, and the market transaction has not improved obviously. 2) Import copper: yesterday LME0-3 discount 23 US dollars / ton, import loss of about 200 yuan / ton. The foreign trade copper market supply and demand is two light, the transaction price does not have the obvious change, but a few fire method and the wet law copper quotation is slightly reduced, reflects the market to have the sign of weakness, but the price adjustment is slow, has not been reflected for the time being. 3) stocks: LME copper stocks decreased by 450 tons to 292500 tons on 30 July, and copper warehouse receipts in the previous period decreased by 25 tons to 62970 tons. 4) spot: spot today, although the market price fell, but the current market transaction enthusiasm is generally low, and the holder is also due to low prices and low inventory and other factors, today the price will continue. It is expected that the spot water will rise by 20 yuan to 60 yuan per ton today.

Copper prices and forecasts: the overall performance of the inside and outside markets last night was low, with Lentong falling all the way to the lowest level of US $5938 per ton in the evening. Shanghai Copper jumped as low as 46880 yuan per ton, down 46780 yuan per ton in the evening, a drop of 0.95 percent. The position of the Shanghai Copper Index increased by 17000 hands to 584000 hands, mainly due to active short entry. The sharp decline last night was mainly due to a shift in market expectations of trade between China and the United States from optimism to rationality. Talks between China and the US are still under way, but the market is cautious about the outcome. And investors wait for the Fed to move, the market risk aversion mood increased. In addition, the situation of Brexit remains unclear. At present, the global economy is weak and the trade outlook is uncertain, and multiple macro factors are putting pressure on copper prices. At present, the copper closing entity in Shanghai has fallen below the middle rail of Brin, the pressure-bearing 60-day moving average, and the technical index has become weak. It is expected to be 5940 to 5990 US dollars per ton and 46750 to 47100 yuan per ton of Shanghai copper today.

(SMM Kwong Tze-si)