The first wave of copper price rise at the beginning of the year was mainly driven by the macro view. Due to both loose monetary and fiscal policies overseas, inflation is stronger than expected. Coupled with the smooth progress of the vaccine, the overseas economy entered the stage of accelerated recovery earlier than expected. At the same time, strong fundamentals also provide some support for copper prices. The consumption expectation increases under the superimposed economic recovery of the "carbon neutralization" target, which makes the level of copper inventory on the low side. However, the rapid rise in copper prices suppressed the consumption of industrial enterprises, spot discounts increased, trading was deserted, the rise in copper prices could not be achieved overnight, and there was a phased consolidation in February. The second wave of copper prices rose in April because macro drivers strengthened again, funds actively entered the market, and prices rose again. In early May, Lun copper broke through the key point of 10000 US dollars / ton, while Shanghai copper exceeded 78000 yuan / ton. Since May, there have been more obvious changes in the policy level, and copper prices have fallen in stages. With the economic recovery superimposed by rising inflation, fears of tightening of overseas liquidity have intensified, creating a so-called "tightening panic". The Fed also sends out "hawk" signals to shock market sentiment from time to time. In addition, at almost the same time, domestic management effectively controlled the rise in commodity prices by shouting, strengthening the supervision of illegal speculation, dumping reserves and other ways.
The tide will eventually recede
Looking forward to the second half of the year, the tide will eventually recede, which may be repeated in the short term. The long-term logic of the copper market has not changed significantly, the long-term growth of consumption is not significant, and the supply is expected to rise in the long term. The liquidity tide that underpins rising prices will eventually recede, and the long-term rise in copper prices will not be sustainable. It is worth noting that in the last round of financial crisis, the Federal Reserve's QE1 and QE2 two rounds of easing failed to support the economic recovery, so it loosened again after the end of a round of QE and opened a new round of QE. At present, because of the marked rise in inflation and the criticism by the opposition parties of the earlier "money-giving" relief, the political pressure on the Fed and the Treasury to tighten liquidity is greater and may be tightened ahead of time before the policy targets are achieved. but if employment fails to recover as scheduled, liquidity is likely to be released structurally again. Therefore, this round of policy tightening is also possible over and over again.
The multi-empty game intensifies.
In the second half of the year, with the weakening of "consistent easing", there is still room for supply and demand repair. On the one hand, the employment target has not yet been met, and on the other hand, inflationary pressures come ahead of schedule, so the Fed is still expected to strengthen expectation management, risk appetite or repetition On the other hand, the supply and demand level enters the end of repairing the imbalance, and the long-short game is obviously intensified.
The slope of copper consumption has slowed, but the resilience lies in the fact that overseas economies cannot repair Synchronize, which may still form a joint force in the second half of the year, and the repair momentum shows signs of switching to the service sector. However, the domestic real estate and export sectors have a certain support for consumption, the inventory level of the copper industry is low, enterprises have the possibility of replenishing inventory, and consumer resilience is expected to remain.
On the supply side, the mine end is the same as the scrap copper. The mine-side supply continues to be repaired, but considering the epidemic situation, the re-signing of labor contracts in major mines and the influence of new tax regulations in Peru, the mine-side supply is still uncertain. On the other hand, the margin of supply increment of scrap copper is narrowed due to the elimination of inventory. In the second half of the year, we should also pay attention to the changes of the epidemic situation, the seasonal disturbance caused by summer power cuts and the impact of dumping and storage on Shanghai copper.
The upward trend is not over.
We believe that copper prices will enter the fishtail market, the upward trend is not over, but volatility intensified. From a macro point of view, before the actual tightening point of policy, it is expected that the easing policy will officially withdraw in the fourth quarter. Prior to this, the Fed will strengthen communication with the market and strengthen expectation management. In the second half of the year, there may be a "seesaw" market in the copper market. The core fluctuation range of Shanghai copper is 65000 won 75000 yuan / ton, and that of Lun copper is 8800Mel 10000 US dollars / ton. If the economic recovery is dragged down by factors such as the epidemic in extreme cases, and the loosening policy is delayed or even relaxed in stages, then copper prices are still expected to hit the previous high again.
At the transaction level, the high probability of copper price oscillates at the central high level, which does not rule out the possibility of short-term price spikes or bottoms caused by supply interference and macro fluctuations. Short-term copper prices can be repaired according to the pace of industrial replenishment of the appropriate layout of long positions, "Golden Nine and Silver Ten" peak season will probably give the bulls a chance to work again, bears still need to wait for the policy to turn.