Trend analysis

According to the monitoring data of business agency, the copper price first fell and then rebounded in July. At the beginning of the month, the copper price was 62968.33 yuan / ton, and at the end of the month, the copper price fell to 60045 yuan / ton, with an overall decline of 4.64% and a year-on-year decline of 17.02%.

According to the current chart of the business community, in July, the spot price of copper was basically higher than the futures price, and the main contract was the expected price in two months. The main basis became larger, which was bad for buying hedging.

According to LME inventory, LME copper inventory in July was slightly higher than that in June, and was relatively high in 1-5 months.

Macro aspect: according to the data of the U.S. Department of labor, the year-on-year increase of the U.S. consumer price index (CPI) from March to May was more than 8% for three consecutive months. In June, CPI increased by 9.1% year-on-year, hitting a new high in nearly 41 years. On July 21, the European Central Bank announced that it would raise the three key interest rates by 50 basis points, which was higher than the 25 basis points previously expected by the market and exceeded the European Central Bank’s forward-looking guidance in June. On the 27th, the Federal Reserve announced a 75 basis point increase in interest rates, raising the target range of the federal funds rate to between 2.25% and 2.5%. This is the fourth interest rate hike by the Federal Reserve this year and the second consecutive 75 basis points hike.

Supply: in the week of July 1, cspt held an online meeting to finalize the TC guidance price of copper concentrate in the third quarter of 2022 at $80 / dry ton, which was the same as that in the second quarter. In July, the overall supply and demand continued to improve month on month, but it was still slightly lower than the level of the same period last year. The intensity of consumption recovery after the epidemic eased was weak. Under the influence of the resumption of production of Shandong refineries, the completion of centralized maintenance of domestic refineries and the recovery of production, the supply of refined copper is expected to gradually increase, and the subsequent or continued accumulation of reserves. However, the domestic inventory showed a downward trend. Although the trade sector showed poor buying interest, the inventory fell and the premium rose, which verified that the current demand is still in the repair list.

Demand: in June, China’s power grid investment was 64.2 billion yuan, an increase of about 26% year-on-year and 74% month on month. In June, the output of air conditioners in China was 22.2143 million units, an increase of 4.4% year-on-year; The export volume of air conditioners was 3.63 million units, lower than the same period in previous years, and the external demand performance was poor. In June, China’s automobile production and sales reached 2.499 million and 2.502 million respectively, with a year-on-year increase of 28.2% and 23.8% respectively. The production and sales of new energy vehicles were 590000 and 596000 respectively, with a year-on-year increase of 1.3 times. In July, the overall demand was poor, and the operating rate and processing fee of copper pipes and rods fell. Except for the automobile direction, other fields entered the seasonal consumption off-season, and downstream purchases remained cautious in the price decline.

Based on the above situation, in July, the copper supply was loose and the consumption was weak. The copper price fell to a two-year low and rebounded slightly after hitting the bottom.

In the second half of the year, the maintenance of domestic smelting enterprises will be reduced. In the new project, the feeding time of the 400000 ton double flash process of Daye Nonferrous Metals is from August to September, and it is expected that the first batch of crude copper will be released in the fourth quarter. The expansion plan of Xinjiang Wuxin has been put into operation, and the output is expected to increase from 10000 tons to 15000 tons after July. Tongling and Fuye also have plans to expand production in the third and fourth quarters. With the reduction of interference and the increase of new investment and construction, the supply will be relaxed again in the second half of the year.

Traditional downstream demand, including air conditioners, wires and cables, will be dragged down by the real estate market. Although the real estate policy has marginal improvement, it is difficult to reverse the weak trend in the second half of the year; Household appliances have also weakened; More hopes are placed on Power Investment under infrastructure construction. It is expected that in August, the pattern of strong supply and weak demand will continue, and the copper price may remain low and volatile.