Copper Weekly Review: price of copper has dropped(week 12)

The supply interference of South American copper mines has slowed down slightly, the supply is still tight, and consumption has not shown obvious signs of improvement.

The stalemate between supply and demand has not been clearly broken, and copper prices have fallen from a high level this week.

1. China's spot copper price trend this week

In the week of March 26, China's spot copper prices fell from a high level. The average price of 1# copper was reported at 66,290 yuan/ton, with an average daily drop of 188 yuan/ton, and a weekly drop of 1.41%; the average price of the previous week was reported at 66960 yuan/ton, a decrease of 670 yuan/ton compared with last week, and a month-on-month decrease of 1.00% .

The disruption in the supply of copper mines in South America has slowed down. The threat of a strike at the Los Pelambres copper mine in Chile has been lifted. However, the delivery of copper concentrate in Peru has been delayed due to a truck driver's strike. The supply of copper concentrate is still tight, and the cost of concentrate processing continues to be low. The data shows that the imports of the first two copper scraps increased significantly, and the import volume of scrap copper increased by 60.4% year-on-year to 191,700 tons.

Recently, there are differences between the supply and demand sides, the downstream market is under greater cost pressure, the operating rate of processing companies is divergent, and the demand for copper pipes is strong, but the start of copper rods is weak. Consumption has yet to show obvious signs of improvement, demand has not recovered quickly, domestic and foreign inventories have still maintained a high level, and the stalemate between supply and demand has not been significantly broken.

2. Futures copper price trend this week

Lun Copper fluctuated and weakened this week. The average price of LME copper in the first four trading days was US$8922.25/ton, with an average daily price of US$66.75/ton; the average price of last week was US$9,047/ton, down 1.38% from the previous month.

Since March, China's economy has continued to recover, with exports, infrastructure and real estate investment being the main driving forces. The Eurozone's March manufacturing data was strong, and manufacturing output surged at a record high. The outlook was relatively optimistic. The Federal Reserve said that the economic recovery exceeded expectations and hinted that it would reduce debt purchases. The U.S. dollar index continued to rise, putting pressure on commodities.

Data show that the trend of Shanghai copper was weak this week. The average weekly settlement price of the current month contract was RMB 66,330/ton, an average daily drop of RMB 164/ton; the average price of the previous week was RMB 66,920/ton, down 0.88% from the previous week. Shanghai copper stocks continued their upward trend this week, increasing by 987 tons to 188,359 tons, an increase of 0.53%, and the cumulative increase in the last eight weeks reached 183.97%.

3. Lun Copper Week Inventory Situation

This week, London's copper stocks continued their upward trend, with a cumulative increase of 18,850 metric tons to 123,800 metric tons, an increase of 17.96%.

Fourth, this week's hot finance

China:

1. From January to February this year, 303.2 billion yuan of investment in fixed assets in transportation was completed, an increase of 71.7% over the same period in 2020. Compared with the same period last year, the main indicators of transportation, investment, freight volume, and port cargo throughput have shown substantial growth.

2. The State Grid of China issued an important measure to serve carbon peaks and carbon neutrality to build a new power system and accelerate the development and construction of pumped storage energy. During the "14th Five-Year Plan" period, new energy concentrated development areas and load centers will start new installations of more than 20 million kilowatts. , Pumped storage power stations with an investment of more than 100 billion yuan.

International aspect:

1. The initial value of the manufacturing PMI in the euro area in March: the previous value was 57.9, the expected value was 57.7, and the announcement was 62.4. The euro area economy exceeded expectations in March, mainly due to the record surge in manufacturing output; but the service industry is still the economy The weak link.

2. The initial value of the Markit manufacturing PMI in the United States in March was 59, the expected value was 59.3, and the previous value was 58.6. With the strong growth in new orders, the US manufacturing industry improved slightly in early March.

Five, copper market news of the week

1. The senior Indonesian minister stated that Freeport-McMoRan will sign a US$2.8 billion agreement with China’s Tsingshan Holding Group on March 31 to build a copper smelter in Weda Bay, Indonesia .

2. Workers at the Los Pelambres copper mine in Chile, owned by Antofagasta, said on Tuesday that they had accepted a contract and abandoned the threat of strike. The mine produced 372,100 tons of copper in 2020, equivalent to about 6% of Chile's total output.

6. Outlook for the copper price market outlook

With the massive use of vaccines, signs of recovery in the global economy have intensified. However, there is a third wave of epidemics in Europe, and some countries have tightened epidemic control. The European Central Bank Economic Bulletin stated that although the overall economic situation is expected to improve in 2021, there are still uncertainties in the near-term economic outlook. The "worst moment" of the U.S. economy seems to have passed. The Fed said it has seen a substantial recovery and will reduce the scale of bond purchases in the future.

The World Bank predicts that China’s GDP will grow by 8.1% this year, leading the recovery of the Asia-Pacific economy; Bloomberg Economic Research (BE) raised China’s growth rate forecast for 2021 to 9.3%, which was 8.2% in November last year. It is reported that Chinese copper smelters do not set a minimum Q2 processing and refining fee (TC/RCS) standard, and the supply of concentrates continues to be in short supply; although scrap copper imports and electrolytic copper production increase, the inventory turning point has not yet appeared, but the peak season demand is still expected. Copper prices are expected to fluctuate at a high level next week.

Yunlan Metal is a supplier of precision copper pipes and copper pipe fittings in China . Our products are widely used in water supply pipelines, air conditioning and refrigeration, medical treatment, construction, solar energy and other fields. Our copper products can be customized according to customer needs and comply with mainstream standards such as ASTM, BS EN, and JIS. For many years, Yunlan Metal's copper pipes and copper pipe fittings have been exported to Southeast Asia, Europe, Africa and the Middle East and other markets.

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