1. Related information
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1.1 In August, China’s refined copper (electrolytic copper) output was 917000 tons, up 3.9% year on year
From January to August, the output of refined copper (electrolytic copper) was 7.118 million tons, up 2.6% year on year; China’s copper production in August was 1.965 million tons, up 7.3% year on year. From January to August, the copper production was 14.184 million tons, up 4.3% year on year.
1.2 China Nonferrous Metals News: Can China’s crude copper refining capacity continue to expand?
By the end of 2021, China has a worldwide copper rough refining capacity of 8.82 million tons/year, and a global copper concentrate copper bearing capacity of 3.24 million tons/year in the same period.
In terms of production capacity, the self-sufficiency rate of crude copper refining resources in China is only 36.7%, while the copper bearing capacity of two major copper mine projects, Las Bambas Copper Mine and Toromocho Copper Mine, which are held by Chinese enterprises in Peru, totals 700000 tons/year. Both normal production is affected by different degrees due to community problems, and the actual resource security is lower.
From the perspective of resource supply, industrial operation, demand situation and corporate responsibility, China’s copper rough refining capacity should not continue to expand without the supply of its own copper resources.
2. Panel condition
The copper price continued to fluctuate in a narrow range yesterday, with 2714 net positions reduced and 8875 net positions reduced in the domestic market.
On the macro level, the results of the interest meeting are about to be released. Today, the market sentiment is weak. It is expected that the Federal Reserve will increase interest rates by 75bp with a high probability in September. Within the market expectation, the market sentiment will recover after the boots are landed.
Fundamentally, the average premium of Copper Changjiang Nonferrous Metals is 830 yuan/ton, which is still at a historical high. The LME (0-3) premium is 68 dollars/ton. At the same time, the inventory of the world’s three major exchanges continues to decline to 184100 tons. Both sides of the copper market may be playing a game around delivery, which is weaker than at the beginning of the week.
In the short term, the macro emotional disturbance will intensify next week, but the back structure of high premium+low inventory will continue to strengthen, and the long short game will intensify. It is expected that the volatility of copper prices will intensify in the week.
Strong supply and demand support.
On the supply side, the copper concentrate port stock is 971000 tons, and the TC is at 81.6 dollars/dry ton, so the supply at the mine side is acceptable. In August, the domestic refined copper output was 917000 tons, up 3.9% year on year, and the smelting capacity was running smoothly.
From the perspective of copper exports and output, exports in August fell by 38.6% year on year, but the overall growth from January to August was still 6% year on year; The domestic output in August was 1.965 million tons, up 7.3% year on year. The domestic market and export consumption are performing well, and the current peak consumption season of Jinjiuyinshi is still expected.
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3. Core logic
In the short term, with the support of fundamentals, the mood at the early stage of the interest meeting was weak. After the boots landed, the copper price may be strengthened by stages, and it is expected that the copper price will first decrease and then increase. Short term focus on the Federal Reserve’s interest rate increase plan in September.
4. Spot transaction
According to Shanghai Metal Network, transactions in the spot market were average yesterday, with the premium falling by 95 yuan/ton. Copper prices rebounded slightly. The spot premium was lower than the day before yesterday. In the session, the main stream of Pingshui copper rose by 630 yuan, and the good copper rose by about 650 yuan. The wet copper and differential copper were reported to be scarce.
5. Strategy Suggestions
It is suggested that speculators operate in a range, and short-term periodic bull opportunities can be concerned; It is better to purchase on demand at the industrial end. Pay attention to the risk points such as the Federal Reserve’s next interest rate increase signal, consumption and epidemic situation.
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