1、 Trend analysis
According to monitoring data from Business Society, there was a high volatility followed by a decline. As of the end of the month, the copper price at the beginning of the month was 77831.67 yuan/ton. At the end of the month, the copper price fell to 73223.33 yuan/ton, with an overall decline of 5.92% and a year-on-year increase of 6.11%.
According to the current chart of Shengyi Society, copper futures prices in July were mostly higher than spot prices, and the main contract is the expected price two months later. The overall copper price is bearish in the future.
According to LME inventory, LME copper inventory increased significantly in July. As of the end of the month, LME copper inventory was 239400 tons, up 32.96% from the beginning of the month, hitting a new low in recent years.
Macroscopically, the US S&P Global Manufacturing PMI fell to 49.5 in July. The European and American regions have released the Purchasing Managers’ Index (PMI) for the manufacturing industry, which shows that the index is lower than expected and previous values, triggering market concerns about the possibility of overseas economies falling into recession. The pessimistic sentiment in the global financial market continues to ferment, and China’s important conference has not released the stimulus policies expected by the market, which has dampened investor confidence. But the actual GDP of the United States in the second quarter was 2.8%, higher than expected and previous values, easing pessimistic sentiment towards demand.
On the supply side, domestic copper production steadily increased in June, reaching 1.005 million tons, a year-on-year increase of 9.5%. The estimated production for July is 1.00166 million tons. Domestic electrolytic copper smelting enterprises have not been affected by the shortage of copper mines, and their production has increased instead of decreased. The maintenance period of domestic smelters has come to an end. After the early maintenance enterprises resumed production, they began to ramp up production, while other smelters were producing normally, resulting in a month on month increase in production.
Downstream: The flat demand for cables has limited consumer demand, and the sustained high copper prices have put significant pressure on terminal consumption. Even if the copper price drops in July and stimulates a rebound in cable consumption, it will be difficult to effectively generate consumer demand in August. The domestic air conditioning industry has shown positive production and sales performance in the first half of this year. July has clearly entered the off-season for air conditioning industry production, and August remains the off-season for air conditioning industry production and sales. The characteristics of the off-season will continue. The overall production and sales performance of the domestic automotive industry is better than previous years, and the production of new energy vehicles has continued to rebound since March, driving the overall performance of the automotive industry.
Imports: The import volume of unprocessed copper and copper materials in China in June was 436000 tons, and the import volume of unprocessed copper and copper materials from January to June was 2.763 million tons, a year-on-year increase of 6.8%.
According to the annual price comparison chart of Shengyi Society, in the past five years, copper prices have fallen more than risen in July.
The largest copper mine strike
The mining giant BHP’s Escondida copper mine in Chile is the world’s largest copper mine, and its union is calling on its nearly 2400 members to reject the company’s final contract offer and prepare for a strike.
Based on the above situation, the expectation of the Federal Reserve cutting interest rates is expected to strike again, and the volatility of the US dollar may increase in August. Fundamentally, refineries will once again face pressure on raw material supply. In terms of demand, the off-season characteristics of consumption are obvious. Except for the stable demand in the automotive industry, other terminal copper ports are difficult to have substantial demand pull. The insufficient increment and frequent disturbances on the supply side, as well as the growth in demand for new energy and overseas infrastructure, have limited the potential for a deep decline in copper prices. Short term copper mine disturbance, copper prices may rebound at a low level, but overall demand is limited, and it is expected that copper prices will mainly fluctuate within the range in August.
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