Source: new Century Futures
01
Macroscopical aspect:
Recent domestic economic data are slightly weaker, reflecting that it will take time for short-term demand to improve. Medium-and long-term domestic equipment renewal cycle supports the demand for non-ferrous metals. Overseas, the US GDP in the first quarter was lower than expected, but consumer investment was solid, inflation was stubborn, and previous market trading expectations of interest rate cuts may be knocked out. The global manufacturing replenishment cycle begins to support the strong operation of copper prices. In terms of event disturbance, Anglo-American sanctions on Russian metals delivery on the LME exchange triggered expectations of forced positions, but did not prevent Russian metals from circulating in the spot market, which may have a limited impact on metal prices. Macro variables affecting copper price in the later stage: domestic economic recovery process is tortuous (negative)AbumagelitegreenIncreased domestic policy stimulus to boost economic recovery expectations (bullish); US economic data remain strong, demand and investment robust (bullish); Fed interest rate cut expectations fall sharply (bearish); geopolitical military games affect risk appetite (bearish).
Figure 1: the growth rate of fixed investment in China's high-tech industry
Figure 2: month-on-month GDP growth rate in the United States
02
Industry:
According to SMM information, although the smelter maintenance and export increase affect the volume of goods, but the recent increase in the inflow of non-standard copper imports, the supply is still relatively adequate. On the consumption side, near the May Day holiday, there is a certain reserve demand downstream, leading to a slight rebound in consumption, but the whole is still suppressed by high copper prices. As of April 25, copper stocks in the mainstream areas of SMM increased by 0% month-on-month compared with Monday.Abumagelitegreen.10, 000 tons to 404700 tons, an increase of 1200 tons over last Thursday. Taken together, the Chilean president and Aurubis, Europe's largest refined copper producer, have said they have plans to expand production, which may ease supply concerns. On the supply side of copper mines, in late April, the processing fee index of imported copper mines was 4.23 US dollars / ton, down 1.82 US dollars / ton from the middle of the year, which is at an all-time low. It is greatly affected by the reduction and suspension of production of overseas copper mines and the reduction of processing fees of copper mines in 2024. According to institutional data, the benchmark price of copper processing fee in 2024 is US $80 / ton, which is US $8 / t lower than that in 2023, reflecting the tight supply of imported copper mines, the decline in copper processing fees has led to the compression of smelter profits, and some smelters have production reduction plans expected to stimulate a sharp rebound in short-term copper prices, but also curb some downstream procurement demand. Demand side bright spot, AI computing power and new energy power demand resonance, copper incremental demand is ignited, copper is endowed by the market with the concept of new quality productivity in line with the direction of high-tech development. Medium-term copper prices in the macro and industrial fundamentals of the long-short intertwined, or in the 65000-85000 yuan / ton wide range shock. Under the background of long-term energy transformation and scientific and technological change, the bottom range of copper price has risen steadily.
The meso variables that affect the copper price in the later stage: the processing fee of imported copper mine falls, the tight supply of copper mine leads to the expected reduction of smelter production (bullish), the purchasing enthusiasm of downstream is restrained, and the domestic copper inventory picks up (negative); the terminal demand of real estate infrastructure is not as good as expected (negative). Copper prices remain high, or stimulate production expansion plans in major producing countries (negative).
Figure 3: copper inventory at home and abroad
Figure 4: processing fees for imported copper mines
03
Trading area:
Domestic macro policy remained loose and the economy improved slightly. In the first quarter, US GDP was lower than expected, but consumer investment was solid, inflation was stubborn, and previous market trading expectations of interest rate cuts may be knocked out. The global manufacturing replenishment cycle begins to support the strong operation of copper prices. Copper prices continue to rise in the process, but also continue to absorb all kinds of good. Things will be reversed at the extreme, otherwise they will come to the extreme. Rising more is the greatest negative, while falling more is the greatest good. Short-term copper prices are high at the top, above or resistance. In the medium term, the price of copper in Shanghai may operate in the range of 65000-85000 yuan / ton. Under the background of long-term energy transformation and scientific and technological change, the bottom range of copper price has risen steadily.
