Copper price rebound is difficult to change mid-term decline, mid-term marginal changes in supply and demand are negative
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Copper prices fell sharply in mid-to-early November. Domestic and foreign copper prices stopped falling and rebounded after November 20. The Shanghai Copper 1801 contract rebounded by more than 2%, and the LME copper rebounded nearly 2% in three months..The main driving force of the short-term copper price rebound comes from inventory transfer, the weakening of the US dollar and the rebound in inflation expectations. From a medium-term logic, the growth rate of real estate and infrastructure investment has both fallen, which means that the trend of weakening demand has just begun, and the rebound in copper prices is only in the mid-term. The downtrend is just a draw. Inventory transfer catalyzes replenishment expectations. From the perspective of global copper inventory, a new round of inventory transfer seems to be underway.Data show that as of November 22, LME copper stocks fell to 22.630,000 tons, a decrease of 6 compared with the same period last year.6%, LME copper stocks have a high point of 35 during the year.40,000 tons.Copper inventories on the Shanghai Futures Exchange continued to rise. As of November 17, the copper inventories on the Shanghai Futures Exchange rose to 16.280,000 tons, the highest level since September 22, a sharp increase of 21% over the same period last year.At the same time, the COMEX copper warehouse rose to 210,000 tons on November 21, a sharp increase of 153% over the same period last year.. From the perspective of historical inventory changes, the transfer of LME copper inventory to Shanghai is often accompanied by a rebound or rise in copper prices. The market believes that China has increased imports to replenish inventory. From the perspective of import profit and loss, since October, the three-month copper import loss has been significantly reduced, and the import window period of import profit has appeared from time to time..However, since the beginning of late November, Shanghai copper rebounded more than LME copper prices, and the import loss expanded again. On November 21, the import loss expanded to 1,050 yuan/ton..This means that the inventory transfer cycle will be very short, restraining the rebound of copper prices in the market outlook. Phased weakening of the U.S. dollar and rebound in crude oil. In the long run, the U.S. dollar and copper prices are highly positively correlated.In November, the short-term and long-term interest rate spreads of U.S. Treasuries narrowed significantly, the prospects for the U.S. economic recovery were weakened, the recovery of U.S. inflation was not as strong as expected, and the pace of the Fed’s rate hike may slow down..The Fed’s slower pace of tightening than expected will boost the vibration of the rebound in copper prices. In addition, since the third quarter, the rebound in international crude oil has led to a rebound in global inflation expectations, and copper prices and inflation are positively correlated, so copper prices have also been supported by the rebound in oil prices.. The marginal change in supply and demand in the medium term is negative for copper prices. From the supply side, domestic copper smelting companies have less maintenance capacity in October and November, and the impact of Jiangxi Copper’s maintenance in October is 0.With an output of 10,000 tons, only Hengbang Copper was overhauled in November, and the output impact is almost negligible.In addition, Huludao Hongyue North Copper’s 150,000 tons of electrolytic copper project was put into trial production in November, and the 100,000 tons of electrolytic copper project of Jiangxi Hengfeng Feinan Environmental Technology Co., Ltd. was completed and put into operation (annual recycling and processing of 300,000 tons of scrap metal). November copper production continued to rise month-on-month. The demand side is dragged down by seasonal off-season and real estate cooling. At present, there are only copper pipe demand for home appliances and copper foil demand for new energy vehicles in the downstream copper industry. The demand for copper rods and wires by cable companies and other infrastructure parts is significantly weaker..The survey found that some cable companies’ orders fell by 20% from the previous month in late October.From the perspective of the completion of power grid investment, from January to October, the power grid investment completed 4126.400 million yuan, according to the plan to invest 587.1 billion yuan at the beginning of the year, 1744 will be completed in November and December.600 million yuan can achieve the annual goal.Therefore, grid investment will continue to be sluggish. In general, demand-side indicators, such as real estate investment and infrastructure investment, continued to decline, while export growth also slowed to 6 in October.9%, which means that both domestic and foreign demand growth are facing the risk of continuing to fall.With the rebound in imports and the rebound in output on the supply side, the margin of supply has improved, and the rebound in copper prices may be a return to the fall in the mid-term peaking..