SMM, 25 Oct:
In recent days, Chile, the world's largest copper reserve country, has been in frequent trouble. A number of mining companies, such as Escondida and chuquicamata, have joined the strike brigade due to the nationwide demonstrations and riots triggered by the "subway ticket rise", sparking concerns on the supply side of the market. At the same time, the Brexit incident first boosted and then suppressed, Johnson began to get support to the pound straight to 47000 strong power, copper prices in the favor of double factors to maintain stability above the 47000 level, and now due to the unexpected decline in EIA crude oil stocks and Chilean mining disputes intensified again led to another wave of copper prices, has rushed to 47500 yuan / ton level, frequently higher after Shanghai copper can continue to high?
From a macro point of view, at present, due to the failure of Britain's plans to leave the European Union at the end of the month, the short-term impact on the market will gradually fade. The United States, as the leader of the global economy, its recent poor economic data has led to increased expectations of the Fed to cut interest rates. European economic data also showed no signs of improvement, the euro zone Markit data in October continued to fall short of expectations, Germany as the leader of the European economy is weak again, the European Central Bank President Draghi also said that he will maintain easing for a long time. The global macro weakness has not improved.
Fundamentals see that the disturbance at the mining end of Chile has basically come to an end, and the expectation of disturbance on the supply side has been basically digested on the disk. On the domestic supply side, electrolytic copper accumulates ahead of schedule this year after National Day, and the supply of electrolytic copper is relatively sufficient in the market. Electrolytic copper spot market due to high copper prices superimposed supply is generally weak, the average price of rising water is also from 95 yuan / ton at the beginning of the week to 525 yuan / ton discount. On the demand side, the "Golden Nine and Silver 10" consumption season is nearing the end. From the terminal demand port, the power grid investment reached 295.3 billion yuan in September, down 12.5% from the same period last year, which was narrowed from the decline in August, but compared with the previous few years, the cumulative amount of power grid investment was still the lowest in nearly five years. The total amount of power investment reached 179.7 billion yuan, a cumulative growth rate of 6 percent over the same period last year. However, as far as copper consumption is concerned, the pull of power grid investment to copper demand far exceeds that of power supply investment. Electricity is the biggest focus of copper consumption port in the fourth quarter, and the recovery of power grid investment in September continues to be less than expected. Copper consumption continues to sound the alarm bell in the next two months, and according to SMM, other terminal sectors such as home appliances and cars are still performing mediocre.
Overall, the demand side is not prosperous superimposed supply side supply is sufficient, "gold nine silver 10" after the fundamental situation is difficult to have a good support for copper prices, the disk structure of the month about 1911 and recent months 1912 contracts also continue to maintain the Contango structure, the price difference maintained at about 60 yuan; stacked macro-level weakness, copper prices due to the recent sudden news surface of the situation is difficult to stand firm, the weakness of the environment will further drive copper prices back to 47000 yuan / ton.