Domestic and foreign industrial enterprises actively participate in international copper futures

SMM Network News: November 19, international copper futures officially listed in the last phase of energy trading. As the first international futures contract operating in the "double contract" mode in China, the performance of international copper futures on the first day has attracted the attention of the market.

A number of industrial enterprises at home and abroad have reached the first batch of transactions.

According to the previous issue of energy disclosure, the first day of international copper futures trading members and customers to participate in collective bidding are 47, 80, the first batch of 267 transactions.

The Futures Daily reporter found that there are also many domestic and foreign copper industry chain enterprises participating in collective bidding to reach the first batch of transactions, including Zhongji Ningbo Group Co., Ltd., Jiangxi Copper Co., Ltd., Minmetals Nonferrous Metals Co., Ltd., Wanbao Minerals Co., Ltd., ENVY GLOBAL TRADING PTE. LTD., TRIWAY INVESTMENT (HK) LIMITED, SUCDEN FINANCIAL LIMITED, Jiangtong International Trading Co., Ltd., Yunnan Copper Co., Ltd., Hongyuan Hengli (Shanghai) Industrial Co., Ltd., Shanghai Yujiangyuan Trading Co., Ltd., BOCI Global Commodities Limited, LOBB HENG PTE LTD, etc.

Among the domestic copper industry chain enterprises that participated in collective bidding and reached the first batch of transactions, the relevant person in charge of Zhongji Ningbo Group Co., Ltd. told reporters that the listing of international copper futures provides a platform for domestic small and medium-sized copper industry chain enterprises to participate in international transactions, stabilizes the fluctuation risk of the entire market, and reduces the risk of import price difference for domestic upstream and downstream enterprises. At the same time, through spot delivery, we can improve the liquidity of copper warehouse receipts in the bonded area and reduce the spot premium of copper in the market, which is conducive to the promotion of the bargaining power of electrolytic copper.

In the commodity business, China Base Group has continuously extended to the industrial chain by combining the real economy, forming a new and healthy and stable development pattern of combining industry and trade, combining future and present, going deep into the industrial chain and capitalization operation. At the same time, the company makes full use of the futures market to provide stable and efficient supply services for domestic downstream enterprises. " The official said that as a company serving domestic downstream entity enterprises, after the listing of international copper futures, CICC can flexibly use international copper futures contracts to reduce the premium cost and hedging cost of spot procurement. At the same time, the listing of international copper futures also brings more convenience and flexibility for trading. When market opportunities arise, companies can directly use domestic Shanghai copper futures contracts and international copper futures contracts to lock in import profits, purchase spot goods through warehouse receipt trading system, and directly import to domestic sales, which greatly improves the efficiency of import.

In his view, the listing of international copper futures is of great significance. On the one hand, it will attract more enterprises to participate in the arbitrage trade of Shanghai copper and international copper, providing more liquidity for the market; on the other hand, it also reduces the restrictions on foreign exchange for enterprises to participate in outer disk trading, improving the convenience of trading. In addition, for the industry, the introduction of international copper futures will gradually improve the pricing voice of the domestic copper industry, and part of the long order pricing model will shift to international copper pricing. He believes that the "double contract" model of Shanghai copper futures and international copper futures will better coordinate two kinds of resources in both domestic and international markets through the simultaneous operation of "dual platforms" and common service "double cycles". It is of positive significance to enhance the new advantages of international cooperation and competition in China's copper industry and to meet the needs of enterprise risk management more comprehensively and efficiently.

At the same time, the reporter learned that on the same day, Jinrui Futures helped Jiangxi Copper Co., Ltd. win the first overseas trading order of international copper futures BC2103, BC2106, and BC2109 contracts. Shen Chun, general branch secretary and deputy general manager of Jinrui Futures Party, told reporters that as a member of the exchange, the company also expects copper enterprises and investment institutions at home and abroad to actively participate in the international copper futures market and will actively promote international copper futures varieties. help the international copper market expand the scale of the market, introduce more traders and participants, and enhance the ability of international operation.

Du Fei, a futures analyst at Jinrui, told reporters that China is a big country in copper smelting, consumption and import, and China's copper futures and spot market is of great attraction to international participants. This time, international copper futures have opened channels for overseas participation in China's copper futures market, which will change the pricing model of domestic and overseas enterprises and help copper import and export trade in bonded areas become more active. He also expects that domestic enterprises will take advantage of the "east wind" of the listing of international copper futures to continuously improve the level of enterprise risk management, achieve international standards, and further enhance the international influence of China's copper industry chain.

Generally speaking, the listing of international copper futures provides a new platform for market participants. Guoxin Futures analyst Gu Fengda told reporters that for domestic and foreign participants, international copper futures are priced and settled in RMB, and at the same time, US dollars can be used to offset margin, which not only helps enterprises to reduce exchange costs. it also helps to speed up the internationalization of RMB. For the copper industry chain enterprises, we can make good use of the characteristics of "net price trading" of international copper futures to carry out fine hedging exposure management, so as to avoid the actual effect of complete hedging affected by tax revenue. For copper import and export trade enterprises, the listing of international copper futures increases more options for futures pricing and trade flow, which helps to improve the risk management ability of enterprises in the bonded copper market and the level of convenience for goods settlement.

From the perspective of international commodity pricing power, Gu Fengda said that after the international copper futures are officially listed and traded, they will form a market-oriented premium premium with mature Shanghai copper futures, and with Lunn copper futures and New York copper futures in overseas markets, to form a "US dollar copper-international copper-Shanghai copper" related derivatives arbitrage combination. Market-oriented arbitrage will increase the enthusiasm of domestic and foreign copper industry chain enterprises and professional investment institutions to participate in cross-city transactions.

He told reporters that in the past, due to obstacles in net price trading habits and tariffs in the international market, the huge copper stocks in China's bonded areas were mostly priced on LME copper futures, while the listing of international copper futures not only increased futures pricing options for overseas and domestic copper traders, but also helped to strengthen risk management in the process of copper import and export trade and promote the process of RMB internationalization. To enhance the international discourse and pricing power of China's commodities.

The active price closed slightly lower on the first day of trading.

According to the reporter's understanding, on the first day of the international copper futures listing, there are nine contracts listed for trading, respectively, the BC2103,BC2104,BC2105,BC2106,BC2107,BC2108,BC2109,BC2110,BC2111 contract, the listing benchmark price is 47680 yuan / ton.

From the perspective of trading, as of November 19, the total trading volume of international copper futures on the first day of listing was 8300 lots, the transaction volume was 1.968 billion yuan, and the total position was 2100 lots, of which the main BC2103 totaled 7600 lots, with a transaction volume of 1.782 billion yuan. From the price operation point of view, the main BC2103 contract closing price of 47090 yuan / ton, 1.24% lower than the listing benchmark price.

Wang Ringjian, a metal analyst at South China Futures, said that on the first day of listing, through collective bidding, the international copper 2103 contract opened at 47500 yuan / ton, hit an intraday high of 47600 yuan / ton within 1 minute after the opening, and then short positions increased, and copper prices fell back to around 47100 yuan / ton, finally closing at 47090 yuan / ton. In his view, the benchmark price of international copper listing is slightly higher than market expectations. From the perspective of US dollar copper, calculated according to the (LME rescheduling fee Yangshan copper premium) × exchange rate formula, the theoretical price of today's BC2103 contract is around 46800 yuan / ton.

It can be seen that the trend of international copper is different from that of Shanghai copper, which is mainly reflected in the relatively weak trend of international copper. Wei Lai, an analyst at Cofco Futures, believes that it is reasonable to have such a difference on the first day of listing, because the listing benchmark price of international copper is based on a series of theoretical calculations, but the market situation is still changing after the listing benchmark price is determined, so international copper needs to adjust its pricing according to the latest market conditions after listing. In addition, because the international copper futures are positioned as a "double cycle", involving bonded and domestic markets, LME copper, international copper and Shanghai copper also need to be adjusted to a relatively appropriate price ratio, and market participants also need a process of adaptation and exploration. In the long run, after the correction of the international copper price based on the market situation is completed, it will still show a strong correlation with Shanghai copper.

Gu Fengda told reporters that compared with the existing Shanghai copper futures prices, international copper futures trade tax-free contracts, and their connotative values include Shanghai bonded warehouse receipt premium, riser copper premium and forward basis premium. If it is estimated according to the Shanghai Electrolytic Copper bonded Depot (warehouse receipt) premium of 40 US dollars / ton, brand premium of 110 yuan / ton and forward basis premium, the benchmark price of international copper futures listing on the first day is equivalent to the import cost of overseas markets, slightly higher than market investors had expected. However, considering the strong demand for imported copper in China, there is a certain premium for bonded copper resources, so the valuation of international copper futures is reasonable. He believes that the small adjustment in the price of international copper futures on the first day of listing also shows that market participants are adjusting the level of copper prices according to future expectations.

In the view of Wang Rong, chief researcher of Guotai Junan Futures, international copper futures intraday price fluctuations and LME copper and SHFE copper prices form a good coordination. "at present, considering the linkage of copper prices in the three markets of INE, SHFE and LME, the slight correction of the 2103 contract price of international copper futures on the first day of listing is in the reasonable pricing of the market. At the same time, the international copper contract in different months has changed from the flat structure at the time of listing to a near-low and far-high Contango structure, which also reflects the reasonable pricing of the market. " In her view, there is no obvious risk-free arbitrage opportunity among the three markets at present, but with the relative changes in the prices of the three markets and the continuous increase of market arbitrage opportunities, it will also increase the liquidity of the market, thus attracting more participants to intervene. This is a positive feedback process.

Looking at the future performance of copper prices, Gu Fengda said that from a fundamental point of view, the supply and demand of the copper industry chain is tight, the expectation of tight supply at the upstream mine end is still tight, and the prices of by-products such as copper processing fees and sulfuric acid are weak to compress smelting profits. after the demand-side market enters the off-season of consumption, the reality of the off-season of traditional non-ferrous consumption is diluted by optimistic economic growth expectations in the future. Overall, he believes that the recent market risk appetite has been boosted by increased economic policy stimulus in various countries, the center of gravity of commodity prices at home and abroad has risen, and the reality of the off-season of traditional non-ferrous consumption has been diluted by optimistic economic growth expectations in the future. after the early rapid rebound, copper prices are digested in the short term, and copper prices are not lightly overestimated in the medium and long term, and customers are advised to take a higher view of copper in the first-line band operation.