Copper Weekly Review: Demand growth is expected to be optimistic, copper prices have risen sharply this week

The copper processing fee TC continues to decrease, the supply of copper ore remains tight, and the supply outlook remains pessimistic. This year the copper market may face a historical shortage. The development of clean energy will drive new demand growth. The United States continues to promote large-scale stimulus measures. Copper prices rose sharply during the week.

1. China's spot copper price trend this week

In the week of February 26, domestic spot copper prices rose sharply. The average price of 1# copper reported 68280 yuan/ton, an average daily increase of 1018 yuan/ton, a weekly increase of 8.03%; the average price of the previous week was 63070 yuan/ton, an increase of 5210 yuan/ton compared with last week, an increase of 7.63% month-on-month .

Zambia’s copper production hit a record high in 2020, but Peru’s copper production fell by 12.5%, and Chile’s copper production fell by 8.7% in December. Copper ore processing fee TC continues to decrease, smelting costs continue to remain high, copper ore supply is still tight, and may enter a period of low growth. The outlook for concentrate supply is still pessimistic.

Goldman Sachs said copper is facing a historical shortage, and demand growth in the next few years may exceed supply growth. The global promotion of clean and green energy will benefit the consumption of non-ferrous metals such as copper. The development of clean energy will drive new demand growth. Inventories in major global exchanges are still at a low level. The market is optimistic about the recovery of China's post-holiday demand. This week, copper prices hit a nearly ten-year high.

2. One-week trend of copper futures prices

LME copper continued to climb this week. The average price of LME copper in the first four trading days was US$9304.25/ton, an average daily increase of US$103.5/ton; the average price last week was US$8556.4/ton, an increase of 8.74% from the previous month.

China has advocated "Chinese New Year in situ" in many places this year, and the resumption of work and production in downstream may be ahead of schedule, and the port economy in January ushered in a "good start". The global epidemic situation has eased, and the economic prospects of Europe and the United States have improved. The United States continues to promote large-scale stimulus measures. The US$2 trillion "climate and infrastructure plan" focuses on new energy and green transportation. The Federal Reserve maintains loose monetary policy, but said the prospects for economic recovery are full of uncertainty.

This week, the center of gravity of Shanghai copper moved upwards. The average weekly settlement price of the current month contract was 67864 yuan/ton, an average daily increase of 1,336 yuan/ton; the average price of the previous week was reported at 62995 yuan/ton, an increase of 7.73% from the previous week. Shanghai copper stocks continued to accumulate this week, increasing by 35,170 tons to 147,958 tons, an increase of 31.18%, and the cumulative increase of 122.28% in the past four weeks.

3. Lun Copper Week Inventory Situation

This week, London's copper stocks have rebounded, with a cumulative increase of 525 metric tons to 76,225 metric tons, a cumulative increase of 0.69%.

Fourth, hot finance at home and abroad

Domestic side:

1. According to data from the National Bureau of Statistics, in January 2021, the real estate market is generally stable. The sales price of commercial residential buildings in all tiers of cities has increased month-on-month, and the year-on-year increase has increased and decreased.

2. According to data from the Travel Union, the market declined seasonally in February. Retail sales are expected to be 1.190 million vehicles, a year-on-year increase of 377.0% and a month-on-month decline of 44.9%. Macroeconomic and policy support for the auto market continues.

International aspect:

1. The final CPI value of the Eurozone in January increased by 0.9% year-on-year; in December, it decreased by 0.3% year-on-year. The core CPI of the euro zone excluding energy, food, tobacco and alcohol rose 1.4% year-on-year in January.

2. The initial value of US durable goods orders in January increased by 3.4% month-on-month, better than the expected increase of 1.1%. The previous value in December last year was revised up from 0.5% to 1.2%. This data has risen for 9 consecutive months, and the US manufacturing recovery is accumulating momentum at the beginning of this year.

Five, copper market news of the week

1. In 2020, Zambia's copper output increased from 796,430 tons in the previous year to 88,2061 tons, an increase of 10.8%, a record high. The Minister of Mining of Zambia stated that Zambian output is expected to exceed 900,000 tons in 2021, while the long-term goal is to exceed 1 million tons.

2. An executive of Codelco, Chile’s state-owned world’s largest copper producer, told Reuters on Monday that the company believes the recent surge in copper prices is a "good opportunity" to create cash for investment and control debt, but warns that it may also push up costs. .

6. Outlook for the copper price market outlook

The global economic recovery is expected to continue to strengthen. As the vaccines of various countries are gradually advanced, and the arrival of spring and summer, concerns about the epidemic have weakened. The Fed kept interest rates low and the loose monetary policy continued, but the economy still has a long way to go before it can return to the pre-epidemic level. The economic recovery in the Eurozone still faces multiple challenges. European Central Bank officials warned that rising real interest rates may hurt the economic recovery.

China’s post-holiday demand prospects are bright, downstream processing companies resume work ahead of schedule, and the agency expects that there will be a shortage of supply this year, and the increase in mine supply may be limited. The continued low level of concentrate processing fees TC may restrict smelter production. However, domestic inventories have continued to accumulate, and the recent rapid rise in raw material prices have raised the production costs of downstream and terminal industries. It is expected that copper prices will fluctuate at a high level next week.