Copper Weekly Review: Copper Price refers to the $7,500 line

August 29 19:08:16, 2023

Abstract Core Tip: On the whole, the current trend is still conducive to the rise in copper prices, we still maintain a relatively optimistic judgment. It is expected that next week will be a volatile market, with a support of US$7,200 and a pressure of US$7,500; compared to the Shanghai copper run range of 5.15-5....
Core Tip : On the whole, the current trend is still conducive to the rise in copper prices, we still maintain a relatively optimistic judgment. It is expected that the next week will be a volatile increase, with a support price of US$7,200 and a pressure of US$7,500. Compared with the Shanghai copper period, the operating range is 5.15-54,000; spot copper is 5.2-5.45 million; and scrap copper is 4.7-4.9 million.

First, the electrolytic copper market

This week's Shanghai copper trend is relatively optimistic, has now reached 53,000 above, while the spot good copper also continues to maintain the status of the water, the specific data is as follows:


Combined with the above table data, the spot price of Shanghai copper this week is relatively strong, basically maintaining its premium at around 250 yuan / ton. According to the region, the North China region is still relatively high, roughly approaching RMB 400/ton; the South China region is down, slightly lower than the East China region, basically at the level of RMB 200/ton and below. According to our understanding, in the spot market in East China, the supply of good copper is generally less, which is why it continues to maintain the premium. However, the transaction has not been new. It has been the middle mover who moved the goods and moved it downstream for processing. The amount is relatively small, the original downstream orders are not much, the current copper price is relatively high, so the purchase volume is inevitable. From the perspective of supply, it is expected that the good copper in East China will continue to rise in the next week.


This week, the Shanghai-London ratio was slightly better than expected last week, but the increase was still small, and the import losses were also shrinking. It has already fluctuated around 500 yuan/ton. From the numerical point of view, the current environment is slightly conducive to the financing of copper. Previous traders speculated that the copper inventory in the bonded area had dropped to 300,000 tons, but recently there is a new view: the data shows that the copper inventories in the bonded area fell the fastest in the three months from May to July this year. It will continue to rise again until consumption recovers or prices return to low levels.

This week, the spot spot of copper has continued to maintain its premium status. It has risen to around US$30/ton, and the fluctuation gap between Shanghai and Shanghai is small. It is expected that the Shanghai copper spot will still maintain its premium. However, due to the end of the month, the spot dealer may drop the goods. Withdrawal of funds, it is expected that the ratio of Shanghai and Shanghai will not change much next week.

Second, the recycled copper market

1, electrolytic copper and bright lines

The price of scrap copper changed little this week. During the period, there was a slight increase and decrease. The actual transaction price of the market was basically stable. The average weekly price of Foshan's bright line is about 48,400, a slight increase from last week. The scrap copper price was better than expected, mainly because the copper price performance was firmer than expected, and the callback was basically negligible. However, the refined price difference remains at a high level, indicating a relative oversupply in the market.


This week, the price of scrap copper remained stable. The original macro news of expected negative results was much better than expected, which caused the market to avoid falling. Among them, the Fed's currency minutes did not specify the QE exit time, and the other is that China and Europe's manufacturing data were significantly better than expected and above 50, indicating a strong economic stabilization and recovery. From the data and technical point of view, copper prices will maintain a strong shock, but the probability of a conflict in the short-term is not large.

At present, the bearish atmosphere in the scrap copper spot market is still relatively strong, and the downstream market has not been greatly improved. The copper factory is very limited in its enthusiasm for buying goods. However, the large spread of the refined price gap has once again brought anti-falling space to scrap copper. The traditional Jinjiuyin10 is about to come, and the domestic manufacturing PMI data has also returned to the top of 50, which has brought hope to the rise of scrap copper in the later period. However, in view of the demand for technical adjustment, we still believe that we can wait for a better chance to hoard scrap copper, and we are not eager to chase goods at high prices. The price of scrap copper will have a potential impact of 50,000.

2, August cable enterprise demand and capital double troubles continue

Operating rate: According to incomplete statistics, among the 38 cable companies, 6 large-scale enterprises with an annual production capacity of more than 10,000 tons (average 33,200 tons) have an average operating rate of 72.12%; 14 annual production capacity of 1000-10000 tons (average 4,452.85 tons) The average operating rate of medium-sized enterprises is 54.76%; 18 small-scale enterprises with an annual production capacity of less than 1,000 (average only 332.6 tons) have a slightly higher operating rate than medium-sized enterprises (57.95%).

In terms of orders: the average order of large enterprises was 2,083.33 tons, the medium-sized enterprises were 254.64 tons, and the small enterprises were as low as 18.90 tons. On the one hand, the reason is that the high temperature of the day has continuously hindered the construction of the construction site, and the demand has continued to decline; on the other hand, the delay in payment still hinders the capital turnover of the enterprise. A cable company said: "August is still a low season. Under the renewed impact of sluggish market demand, orders have also declined accordingly. At the same time, some of the payment delays, capital turnover is also difficult, and raw materials procurement is limited. I think this year's business is generally Weak, seeing the market supply and demand in August did not see any signs of improvement, but not optimistic about the latter, but still hope that "Golden September and Silver 10" can bring new highlights."

Third, the downstream market analysis

This week, the ex-factory price of Ningbo Jinlong Hpb58-3 brass rod was stable at 37,000 yuan/ton, which was basically consistent with the trend of copper. As this week's copper price is in a box volatility trend, the price remains at around $7,300, and market orders have not improved, and manufacturers have less room for price adjustment.


The activity of copper products in the market changed little this week, but as copper prices rebounded for two consecutive weeks, the prices of finished copper products were up. According to the copper rod manufacturers, the current price of lead brass rods is low, but there are not many orders. On the contrary, the copper rods with small specifications and high quality are more active. It shows that the demand for high-precision technology products is rising. In the middle of August, copper processing enterprises have reduced their orders in the off-season, and the operating rate has dropped. There are not many raw materials to be replenished. In addition, the current copper prices have risen, and some buyers are afraid to take advantage of high prices. However, Jinjiuyin10 is about to come. In the end of August, the inventory operation has increased. However, in view of the market's concerns about the market, the procurement intensity is not expected to be too large. The demand for copper products will need to be improved in September.

In the cable industry, orders in the past two months have generally remained stable. Due to the impact of off-season and hot weather, the operating rate has declined slightly. According to the surveyed manufacturers, in addition to the market downturn, some merchants' arrears also hindered the company's production operations. Previously, the collapse of copper prices has caused many companies to have tight capital chains. Currently, bank loans are difficult. Therefore, capital turnover is also a dilemma faced by some businesses. However, with the cold weather turning cold, the start of infrastructure construction will increase the cable usage.
Fourth, futures market analysis and forecast

This week, the copper price rebounded at the bottom, showing a small volatility, with strong support around $7,200. The chart below shows:


From a macro perspective, the minutes of the Fed meeting showed that the possibility of slowing down the purchase of bonds in the future is very high. QE has withdrawn from the expected risk appetite for suppressing commodities. From the economic data, the US real estate data has exceeded expectations and the stability of recovery has been increasing. We believe that the possibility of QE exiting in September is relatively small, and the Fed will continue to fully release this expectation to reduce the impact of QE exit and achieve the goal of balancing the market. After the initial value of China's HSBC manufacturing PMI rose above the watershed in August, the US markit manufacturing PMI in August was 53.9, a five-month high. Although France is still weak, the euro zone PMI hit a 26-month high. Germany has performed strongly. Good economic data has appeared in countries and regions that are not very promising in the market, suggesting that the global macroeconomic situation will gradually improve in the coming period.

According to the Chilean Copper Industry Council, the average cost of producing electrolytic copper in Chile in 2012 was 2.22 US dollars / lb, African countries 2.65 US dollars / lb, Asia 2.12 US dollars / lb, Latin America 1.99 US dollars / lb, North America 2.22 US dollars / lb, Oceania The country is 2.38 US dollars / lb, the Western European country is 2.63 US dollars / lb, and the CIS countries are 2.18 US dollars / lb. The global production of electrolytic copper costs $2.15 per pound. However, it should be noted that in the past ten years, the cost of production increase of Chilean copper enterprises has increased by 4.5 times. According to the data released by the Copper Industry Committee, the investment in each ton of refined copper increased by 4.5 million US dollars in 2003, and the average in 2013 reached 20.5 million US dollars. At the beginning of this century, the production cost per ton of copper in the GABY mine was 10 million US dollars. At present, ESCONDIDAD and QUEBRADA BLANCA mines need to invest 35 million US dollars per ton of copper. The main reason for the increase in investment is the increase in environmental protection requirements and the increase in costs in equipment, services, engineering and construction. The cost of miners’ camps has increased by 40% in the past three years. We believe that the rapid growth of mining costs will support prices.

On the technical level, the bullish signal that has been repeatedly reminded has been established, and has achieved a large increase. The positions, volume and price are relatively well matched, and the moving average system is still in the bull market; and the position is from the asset management institution. On the above, there has been a net increase, suggesting that the institutional risk sentiment has improved, and the technical bullish thinking remains unchanged.

In summary, the current trend is still conducive to the rise in copper prices, we still maintain a relatively optimistic judgment. It is expected that the next week will be a volatile increase, with a support price of US$7,200 and a pressure of US$7,500. Compared with the Shanghai copper period, the operating range is 5.15-54,000; spot copper is 5.2-5.45 million; and scrap copper is 4.7-4.9 million.





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