Analysts: copper prices are expected to rise in the short term

Since June, affected by multiple factors, Shanghai Copper continues to oscillate in the market. Analysts believe that the future tightening of macro policy is inevitable, but in the final stage of liquidity easing, the superimposed fundamentals will improve in the short term, and copper prices will have better performance opportunities from August to October.

On the macro level, data released by the US Department of Labor show that non-farm payrolls increased by 943000 in July, and the unemployment rate fell to 5.4% month-on-month, both better than expected, indicating that the US economic recovery is obvious. "this is a step further from the conditions of easing in the United States, which is expected to rise sharply, and interest rates on the dollar and US bonds have risen sharply, which has a greater impact on the financial nature of copper in the short term." 'but in the medium to long term, U.S. debt and inflation expectations are on the rise, indicating a rebound in market risk appetite and investors are more optimistic about the future economic recovery, 'said Li Jintao, a non-ferrous metals analyst at Yide Futures. Historically, with the improvement of the economic situation, the attribute of the copper industry has been strengthened in the policy contraction cycle. under the background of the development of double carbon, copper, as an important raw material, has more room for demand growth, and the current liquidity is still loose, which has not yet reached the stage of substantial tightening, and the emotional impact expected by Taper will be digested soon.

In terms of fundamentals, Li Jintao analyzed that domestic smelters entered the maintenance season in June and July, and power restriction measures were introduced one after another in various places, which continued to interfere with the copper smelting capacity, especially the lack of water in the southwest this summer, and the shortage of power resources has not been alleviated for the time being, and new smelting capacity will be forced into maintenance in August. At the same time, the new production capacity will also be delayed, and the output of electrolytic copper is expected to decline month-on-month in August. In terms of scrap copper, affected by the rebound of the epidemic in Southeast Asia, the import volume of scrap copper showed a downward trend for several months. at the same time, copper prices fell back to a low level, and scrap traders were reluctant to sell, resulting in a shortage of scrap copper in the market, and the price difference of refined copper fell to a lower level. stimulate the recovery of refined copper consumption. In addition, the Escondida copper union, the largest copper mine in Chile, is negotiating over wages, and workers at the Andina and Caserones copper mines have decided to strike, although the short-term strike will not have a real impact on supply, but the process of resolving the strike requires continuous attention.

On the demand side, Li Jintao said that due to the completion of real estate this year, home improvement market sales are hot, the market is not light in the off-season. "judging from the issuance of special bonds, as of July, 37% of the progress of the issuance of local special bonds was completed, and there is great potential for fiscal post-position to drive demand for the rest of the year. In the first half of the year, the investment completed by Electroweb reached 36.7% of the planned investment, and in the second half of the year, orders from the State Grid and post-flood reconstruction projects in Henan will strongly support the consumption of electrolytic copper. "

From the inventory point of view, Li Jintao analysis said that the recent situation of domestic destocking by the epidemic control logistics is not smooth and stagnant, spot rising water fell accordingly. At present, the epidemic is in the critical period of prevention and control and spread. It is optimistically estimated that after two more incubation periods, the spread is expected to be basically controlled. At that time, with the release of demand, the speed of destocking will be accelerated. At the same time, the import window of domestic refined copper has opened, and the removal of inventory in Shanghai Free Trade Zone is smoother than in previous years; the removal of COMEX copper is also faster than in previous years, and the trend of global copper inventory removal continues.

In addition, two copper stockpiles were carried out in China in July this year. Li Jintao said that accurate dumping and storage can, on the one hand, ensure that materials go directly to downstream users and avoid speculation; on the other hand, it can expand effective supply in the market and greatly alleviate downstream processing enterprises. in particular, the difficult situation of high procurement costs for small and medium-sized enterprises. The dumping policy will continue until the end of the year, but the marginal crackdown on the market will gradually weaken, which will mainly affect the rising water structure of the spot market.

Liu Peiyang, an analyst at Central Plains Futures in Shanghai, said that from a fundamental point of view, the situation on the supply side will not push copper prices higher, while the main factors that will affect copper prices in the future are the macro view, especially the adjustment of the Fed's monetary policy. Li Jintao believes that after the domestic epidemic is brought under control, copper prices are expected to fluctuate significantly upward.