1、 Trend analysis
This week, copper prices first rose and then fell. As of July 17th, copper prices were reported at 104191 yuan/ton, an increase of 0.77% from the beginning of the week and a year-on-year increase of 33.48%.
LME copper inventory
According to data released by the London Metal Exchange (LME). LME copper inventory has slightly decreased, with 300600 tons of LME copper inventory as of the weekend, down 1.51% from the beginning of the week.
Macroscopically, the US June CPI fell 0.4% month on month, PPI fell 0.3% month on month, and inflation data was generally lower than expected. The US dollar index was under pressure and fell to a three week low near 100.50. However, during a congressional hearing, the Federal Reserve reiterated its “zero tolerance” for high inflation and downplayed the significance of the improvement in monthly data.
Supply side: Supply side disruptions have further intensified this week. The copper concentrate processing fee TC continues to have a deep negative value, and the long-term bidding has been as low as -250 US dollars per dry ton; The mainstream fixed number transactions are concentrated between -135 and -140 US dollars per ton. In Chile, due to the strong winter front system, heavy snowfall and rainfall may cause short-term disturbances to road transportation and port loading in the northern core mining area. In May, major copper companies in Chile saw a significant decline in production, with Escondida, the world’s largest copper mine, experiencing a year-on-year decrease of 17.6%. The new chairman of Chile’s National Copper Company announced that the assessment core will shift from “production expansion” to “profit priority”, further weakening the supply elasticity. Domestically, as of July 16th, the social inventory of electrolytic copper in mainstream regions of China has dropped to 123400 tons, a decrease of 16600 tons from July 13th.
On the demand side: The demand side continues to be sluggish during the off-season, but high prices are significantly suppressed. Downstream enterprises have weak willingness to accept goods at high prices, and the spot premium is fluctuating around 300 yuan/ton. The trading of refined copper rods in the market has not shown a significant rebound, and orders rely on the purchasing support of large end users. The operating rate of small and medium-sized downstream enterprises is relatively low. LME copper inventory has dropped to 300600 tons, the lowest since February, and the proportion of cancelled warehouse receipts has risen to about 43%.
In summary, the tight supply and mining situation is difficult to reverse, and the negative value of TC depth continues; On the inventory side, domestic social inventory continues to hit a new low for the year, with low inventory providing solid support. But be cautious: weak consumption during the off-season and weak willingness to stock up at high prices downstream; The premium for US copper has dropped to around $340 compared to London copper; COMEX’s high inventory continues to distort global trade flows. Overall, the bullish logic in the industry is still solid, but macro and geopolitical uncertainties have increased, and it is expected that copper prices may weaken and fluctuate in the short term.
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