3.4 Summary of Bronze Morning meeting

[3.4 minutes of SMM Bronze Morning Association]

Macro aspect:

1) the Fed cut interest rates by 50 basis points for the first time since the 2008 financial crisis, the largest in more than a decade. Chairman Powell said the spread of the coronavirus poses new challenges and risks. Wall Street raised expectations of further rate cuts at the March 17-18 Fed meeting and raised bets on cutting interest rates by another 50 basis points by the end of the year. [Lido]

2) in a joint statement by the Group of Seven (G7) on Tuesday, G7 finance ministers were ready to take action, including the use of financial tools, if necessary, to deal with the threat of the epidemic. But it did not say what specific measures would be taken. [Lido]

3) the emergency rate cut failed to allay concerns about the economic outlook, and U. S. stocks tumbled, with 10-year bond yields falling below 1% for the first time in history. S & P further downgraded its global growth forecast. The coronavirus epidemic is expected to drag China's GDP growth down to 4.8% this year, 0.5 percentage points lower than its December forecast of 3.3%. [bearish]

Fundamentals:

1) scrap copper: the price difference of fine scrap yesterday was 581 yuan / ton. According to SMM research, although the recent scrap copper in the high range of transactions, but the order of downstream waste enterprises is not ideal, mainly due to the epidemic led to the slow resumption of real estate, infrastructure and other projects. What is surprising is that today, various provinces and cities have announced a number of large-scale projects to start construction, and the current factory resumption requirements are lower than early, some industry insiders believe that orders may be improved next week.

2) Import of copper: there was a loss of about 400 yuan / ton on imports yesterday. Market transactions continued to remain light. In terms of offer, at present, there are fewer bills of lading to Hong Kong in March, and there are more delays in shipment, while the bill of lading market has not yet started to quote in April, resulting in a relatively light market quotation, and the offer price is generally on the high side. Buyers and sellers because of the mismatch between supply and price lead to a stalemate in market transaction performance.

3) inventory: LME copper stocks were reduced by 5725 tons to 211225 tons on March 3, while copper warehouse receipt stocks in the previous period increased by 2996 tons to 174182 tons.

4) from stock:

East China: yesterday Shanghai electrolytic copper spot to the current month contract report 120-paste 90. Due to the recovery of the disk price, it is expected to continue to curb downstream buying sentiment, but the current discount remains at a high level, the holder's willingness to take the initiative to give up the price is not strong, it is expected that the spot performance stalemate today, spot discount 120-90 yuan / ton.

South China: yesterday Guangdong electrolytic copper spot on the current month contract report 150 ~ 130. Although Guangdong inventories continue to hit record highs, they have not affected this day. Overall, due to the active receipt of goods by large households today, the rising water has increased significantly, but high inventory and weak downstream consumption are still important reasons for restricting the rising water to continue to rise.

Copper price and forecast: last night, Lun copper as a whole showed a downward trend, several intraday signs of rebound but rapid decline. The fall in copper prices last night was mainly due to investors' continued unease about the impact of public health events on the economy, with a surge in confirmed data from overseas, particularly in South Korea and Italy, reviving concerns, with 10-year and 30-year US bond yields hitting record locations, a sign of concerns about a continuing slowdown or even recession. Although the Fed cut interest rates by 50 basis points last night, as the market had digested those expectations, risky assets were boosted in the short term after the news, before US stocks turned back and copper prices fell again. A new wave of easing is coming, and interest rate cuts have become a common choice for all countries. Funds are good in the face of copper prices, but overseas epidemic data and the progress of resuming work at home are still the main factors restricting the recovery of copper prices. In terms of spot, it is expected that today's copper 56505710 US dollars / ton, Shanghai copper 45300-45700 yuan / ton.