SMM, 10 October:

As of September 27, before the National Day, the inventory of the previous period and the bonded area continued to decline. The inventory of the previous period has dropped to 117500 tons, and the inventory of the bonded area has dropped to 295500 tons, a new low in the same period of nearly three years. At one time, the disk was also Back structure, but due to the consumption of gold, nine and silver was not as expected, the downstream purchase of electrolytic copper was relatively cautious, resulting in a rapid decline from the high level of rising water near National Day. The disk Back structure continues to turn into Contango after a "flash in the pan". So what do you expect copper prices to do when you return after the holiday?

After the National Day holiday, due to the sharp decline in the outer plate during the holiday, the inner plate jumped directly after the opening of the inner market. At present, it has fallen for three days in a row, hitting a new low in nearly a month. We expect that 46500 yuan / ton is still expected to become the support level of Shanghai copper for the following reasons:

First of all, after the return of National Day inventory growth is less than expected, according to SMM understanding mainly because of imported copper into the warehouse is less, the overall domestic dominant inventory compared with previous years is still low, at the same time, due to a large number of traders clear inventory before the festival, superimposed disk surface is now in a low position, resulting in a strong buying after the festival, according to SMM research after the spot market buying is more active, traders and downstream have entered the market procurement, rising water is also strong in the high level.

Second, although the "Golden Nine and Silver 10" consumption recovery is expected to be greatly reduced, but because the fourth quarter is still the traditional consumption season, although the fourth quarter is still less than expected but still the final consumption point of the year, and the lower part of copper, infrastructure and power in the fourth quarter of the probability is still relatively large, cars in the fourth quarter compared to previous years is still the peak production season, copper consumer terminals although there is no obvious advantage but still not overly bearish.

Finally, from the perspective of the disk structure, the price difference between the current month contract 1910 and the near month contract about 1911 is small, basically hovering between Back and Contango; the far month contract price difference between 1912 and 2001 is nearly 60 yuan / ton, although the current price difference is too narrow, intertemporal arbitrage space is limited, but at least reflects that investors will not be too pessimistic about the future market, still showing a positive market structure.

On the whole, the financial characteristics of copper have been greatly driven by macro factors, and since the intensification of the trade war this year, superimposed geopolitical crises have occurred frequently, the global macroeconomic shape is weak and weak, Shanghai copper is difficult to make a difference, but the bottom of the sharp decline space is still limited, unless the macro again exposed heavy news, otherwise Shanghai copper is expected to fluctuate around 46500 yuan / ton.