1、 Trend analysis
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According to monitoring data from Business Society, since August, copper prices have fallen first and then risen. The main reason is that the two major bearish factors affecting prices in the early stages of mid to late August, namely the excessive issuance of bonds by Focus America and the slow recovery of the domestic economy, have experienced a significant emotional shift. Subsequently, the weakening of the US dollar index and strong expectations for stable domestic growth have also driven copper prices to rebound from the bottom. Entering the traditional peak demand season in September, there is an expectation that copper prices will have to rise. However, in early September, the rebound trend showed signs of turning around, with a daily decline of 0.63% on the 5th and prices returning to 60000 yuan.
Macroscopic emotional repetition
Although the market began to weaken the impact of excessive bond issuance in mid to late August, and the US dollar index subsequently fell from high levels. In addition, the Federal Reserve maintained a tightening tone, but the resilience of the US economy was difficult to shake off recession expectations and inflation, although in line with expectations, was also fluctuating. The probability of suspending rate hikes in September was almost certain, but the probability of rate hikes in November or December increased. On the domestic side, the tone of stable growth remains unchanged, and policies such as lowering interest rates on existing housing loans and regulating real estate have been implemented, boosting market confidence.
Loose supply
In terms of copper concentrate, the domestic TC quotation remains relatively high, indicating that the expectation for domestic copper concentrate is still relatively loose. In terms of refined copper production, crude refining maintenance increased in September, but the impact on refining capacity was relatively small. The rise in copper prices and premiums may stimulate refining enterprises to maintain high production operations. The estimated production of electrolytic copper in August was 986100 tons, an increase of 6.5% month on month and 20.34% year-on-year.
Import decline
In July, the net import of refined copper decreased by 2.35% year-on-year to 259800 tons, with a cumulative year-on-year decrease of 12.52%; The import volume of scrap copper in July decreased by 12.12% month on month to 119300 metal tons, a year-on-year decrease of 3.8%.
Different levels of demand
In August, the operating rates of pole making, copper materials, and copper rods slightly decreased, while copper plates, foils, and wires and cables slightly rebounded. The demand for copper still focuses on the increase in engineering orders such as power grid and electricity, but the actual performance of real estate demand is still poor.
LME inventory
According to LME inventory, recent LME copper inventory is still on an upward trend, at a higher level this year, suppressing the rise in copper prices. The monthly inventory of refined copper in China decreased by 11000 tons to 88600 tons, while the inventory in bonded areas decreased by 9800 tons to 49300 tons.
Comparison of annual copper prices
According to the annual price comparison chart of copper, in the past five years, copper prices have been fluctuating at a basic high level in September, with no particularly significant upward trend.
Based on the above situation, multiple large and medium-sized banks have announced a reduction in the interest rates of existing housing loans, and five cities in China have announced the implementation of “buying houses but not loans”. The multiple benefits of the real estate market have come in droves, providing support for copper prices. LME copper inventory is at a high level, and copper supply is still loose, putting pressure on copper prices. Based on the patterns of low and peak seasons over the years, there is no obvious “Golden Nine” upward trend in copper prices in September. Copper price increases will suppress demand, and companies do not accept high prices. It is expected that copper prices will mainly fluctuate at high levels in September.
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