Author: Fan Rui
In July, the price of copper continued to fluctuate at a low level since the end of June, and the price of copper continued to oscillate around the 5-day moving average. The market performed more cautiously. From the perspective of market performance, LME copper is weaker than Shanghai copper, and copper prices are under pressure temporarily.
The global economy continues to pick up
In July, the world’s major economies continued the process of economic recovery. However, the US market’s worries about inflation expectations and the shift in monetary policy in Europe and the United States did not continue to ferment in July. The market’s expectation of the Fed’s monetary policy shift has failed in the short term, and the US dollar’s “spirit” has also been significantly reduced.
In Europe, the European Central Bank announced on July 7 that it would clearly set the inflation target at 2% and allow inflation to be too high if necessary. This is the first time the European Central Bank has adjusted its inflation target in the past 20 years. More expectations, which indicates that the short-term monetary policy in the Eurozone will continue to be relatively loose, and continue to provide guarantees for economic recovery.
Domestically, the central bank lowered the deposit reserve ratio of financial institutions by 0.5 percentage points on July 15. After the RRR cut, corporate financing costs have fallen, which has a better effect on the demand side, and the domestic economy is expected to accelerate again. In addition, the short-term European and American monetary policies have resonated with the domestic RRR cut, the global economy is expected to continue to pick up, and the macro atmosphere continues to be loose and optimistic.
The impact of scrap copper is limited
In July, the copper concentrate link ran smoothly, and there were no obvious production and operation problems in major overseas mines. In the second quarter, although there were some strike disturbances in mining companies, it did not have a significant continuous impact. At present, the production of mining companies has returned to stable, and the supply of copper concentrates will continue to increase steadily. From another point of view, the processing fees for imported copper concentrates reported by the market rose rapidly in July, and the worries about the supply of copper concentrates have been dissipated.
In terms of copper scrap, in early July, the domestic tax-included refined scrap price difference was mostly around 1,000 yuan per ton. Since then, the price difference has continued to decline rapidly. On July 21, the tax-included refined scrap price difference has fallen to only 225 yuan/ton, and the supply of copper scrap is tight. The situation is obvious.
In terms of refined copper, according to the current production schedule of the smelter, the smelters involved in the maintenance in August include Baotou Huading Copper, SDIC Jincheng Metallurgy, Baiyin Nonferrous Minmetals Copper Hunan Company and other smelters, involving a production capacity of 500,000 tons. It is estimated that it will affect the output of 23,300 tons. From the perspective of the production schedule, the August maintenance schedule of the smelter has little impact on refined copper production. In addition, processing fees have risen substantially in July, and the supply of refined copper is expected to remain abundant.
In addition, according to the announcement issued by the State Bureau of Grain and Material Reserves, the dumping of reserves began in July and continued until the end of the year. The policy stance to curb irrational price increases in July remains firm, and dumping of reserves will make the supply of refined copper more abundant.
Terminal consumption waits for force
In July, although the operating rates of large, medium and small enterprises dropped from June to June, the operating levels of medium and small enterprises were higher than in the same period of previous years, indicating that the State Reserve’s release of copper raw materials and the overall reduction of reserve requirements have gradually begun to show demand for terminal enterprises Promote effect.
The output of upstream electric copper rod companies rose to 735,900 tons in June, but the inventory of finished products in the same period continued to decrease for three months. Although the recovery of the output of electric copper rod companies cannot rule out the substitution effect of the inflow of scrap copper demand into refined copper, the inventory of finished products is still in The increase in output continues to be digested. It can be seen that the demand for terminal cables has indeed started. Therefore, the author believes that there is still room for a steady recovery of copper for cables in August.
The air-conditioning industry is currently in the traditional off-season. Taking into account that the high copper price in the first half of the year has a weak impact on the production of the air-conditioning industry, and the domestic air-conditioning output in March and April even exceeded the level of the same period in previous years, it is inferred that the reserve and the overall RRR cut zone The coming demand promotion effect may be weak in the air-conditioning industry.
In the automobile market, although domestic sales have slowed down since March, the pressure on automobile inventories is not great, and the production of the automobile industry is still mainly restricted by the shortage of chips.
In summary, the author believes that copper prices in August will continue to fluctuate widely.