Copper Weekly Review: Copper price or attempt to break through

Core Tip: On the technical side, this week's copper price is strictly within the 20- to 60-day moving average system. It is expected that the possibility of a narrow range of volatility will be large, and there is a possibility of a breakthrough next week. Taking into account macroscopic aspects, fundamentals and technical forms, the Fubao Copper Research Group believes that the next week's copper price will support the range of 7150-7200 US dollars, the pressure range is 7450-7500 US dollars; the copper period is 5.2-5.45 million; the spot copper is 5.25-5.45 million; 4.85-5 million.


First, the electrolytic copper market

This week, the Shanghai copper futures contract showed a trend of falling, while the spot copper was also synchronized with the support of high water. Looking at the price trend for a week, 54,000 became a short-term pressure barrier. The specific data of the Fubao Copper Research Group this week are as follows:

According to the situation reflected by the East China spot market, this week's spot copper is still high, and the spot copper supply continues to tighten and gives it solid support. In the face of the new high spot premium in the year, the downstream raw material factories are expected to stop, and the wait-and-see mood has increased repeatedly; the intermediate movers still act as the main force in the spot market, and there has not been a big change in the week. The holders have different mentality, the market supply is small, and the copper is also rising slightly. The holders can't sell the goods, causing the good copper to rise without falling. However, when the copper fell sharply on Thursday, the holders began to shrink and rose. Selling goods. Looking at the week, the trading in the East China market this week did not have outstanding highlights, and the overall performance was flat. It is reported that the movement of customs declaration in the bonded area has increased. If this phenomenon continues, not only the influx of imported copper will cause the domestic high water to fall, but also the inventory of the bonded area will be further reduced.


This week, the Shanghai-London ratio is gradually approaching 7.4, the ratio is suitable, coupled with the beginning of micro-investment in imports, which will use the influx of imported copper, and there are rumors in the spot market that there are signs that traders have increased their customs declarations from the bonded area. Customs data this week showed that China imported 183,023 tons of refined copper in April this year, while imports in March and the same period last year were 218,823 tons and 272,903 tons, respectively, and imports fell to a 22-month low. From the numerical point of view, China's refined copper imports contract, this is due to the impact of some smelters such as India, the impact of some of the supply, the more direct factor should be the domestic downstream copper demand is not good, but can not ignore the loss of many banks to traders The factors that led to the reduction of financing copper by credit certificates.

As mentioned above, some traders have submitted copper declarations to the spot market in the bonded area, and the Yangshan copper premium has shown signs of higher. Many factors will cause the bonded area inventory to fall again. The decline in the bonded area inventory will boost investor confidence and benefit. Copper prices were higher; the euro manufacturing index released yesterday was better than expected, indicating that short-term European copper demand was slightly better than the previous months, and the spot spot price of copper was still at $30/ton, showing no signs of expansion. On the whole, it is expected that the ratio of Shanghai and Shanghai will still fall below 7.4 next week, and it is not possible to break through this barrier for the time being.

Second, the recycled copper market

1. Electrolytic copper and bright lines

This week, scrap copper prices rose first and then fell, the average price of the highest point of 49,450, the lowest point of 49,150, basically in line with last week's judgment on the 1# bright copper line high point in the 49,500 line. The price of this Friday was slightly higher than that of last Friday, but the overall shock range has not changed much. Since May 6th, the average price of 1# bright copper wire has been between 49150-49450 for three consecutive weeks.


The scrap copper market was relatively stable this week, with only a large decline on Thursday. The price of scrap copper has risen steadily from the beginning of the week to a sudden decline. The most important factor comes from the unsatisfactory value of the domestic HSBC PMI preview. In addition, technically speaking, the rise in copper prices is also facing an important resistance level of 54,000. At present, the main risk of macroeconomics still comes from the United States, and the US monetary policy is an important indicator of market concern. In the spot market, this week's scrap copper trading can be said to be step by step, without much change. The larger variables in the market come from smelters. Many scrap copper smelting companies that use scrap copper as raw materials have cut production. The main reason is that the price of scrap copper is high, and the losses of smelting enterprises are increasing. Therefore, we believe that the shortage of scrap copper is not enough to support the price of scrap copper, but the price of scrap copper is still high in the short term. It is expected that the price of scrap copper will fluctuate within a narrow range next week, and merchants and manufacturers can sell and purchase as planned.

2. The difference in scrap copper price is the main reason for the shutdown of the smelting plant

Recently, the news of the suspension of scrap copper smelters has come one after another, which has caused a lot of impact on our scrap copper market. In fact, the tight supply of scrap copper has been in existence for a long time, but this year seems to be particularly serious. The reduction of imports is of course an important reason, but the Fubao Copper Research Group believes that the most important factor is the price. First of all, from the price difference alone. The current smelting process of a large copper enterprise in Qingyuan is based on 92% grade scrap copper. Under normal circumstances, the difference between scrap copper and electrolytic copper of this grade is 2500-3000 yuan/ton, and the price difference between the two is now maintained at 1,000 yuan. Left and right, the phenomenon of upside down is too serious, so I have to stop production and maintenance, and the operating rate is low. In addition, from the price trend. If we look through the reports of previous years, we will find that the price of scrap copper is also very popular. However, this year's copper prices have a lot of new lows. In previous years, the "gambling market" will not work this year.

Although some people said that the shortage of scrap copper supply led to a reduction in smelter production will boost copper prices. However, the Fubao Copper R&D team believes that manufacturing consumption is weak and the support for copper prices is basically small. In the long run, the weak situation in the copper market is difficult to change.

Third, the downstream market analysis

This week, Zhejiang Jinlong Hpb58-3 brass rod ex-factory price has stabilized overall, basically consistent with the trend of copper. In the past week, copper prices have been oscillated above 7,200 US dollars, showing strong willingness to stabilize, thus driving the price of copper rods to maintain stability, fluctuations and fluctuations are always controlled at around 200 yuan, avoiding frequent price adjustments by merchants and affecting orders.


This week, the overall activity of the copper market remained unchanged, and there was no obvious improvement. Copper prices remain at last week's level, but weak demand in China has caused companies to worry that prices will fall again, thus limiting the enthusiasm of some manufacturers to purchase raw materials. At the end of the busy season, it is approaching the end of the peak season. According to previous years, the average operating rate of copper companies in May fell slightly from April. Generally, large enterprises have fixed orders, and the overall operating rate has not changed much. However, SMEs are affected by the fluctuation of copper prices. The market is weak in March and April, forcing many companies to cut production and shut down. The recovery resumed, so the copper market started in May this year and the order level is expected to be stable compared with April.

From January to April, the completion of state power grid construction investment increased by 29.64% year-on-year. At present, the third batch of materials bidding and procurement work in various regions will gradually start. It can be seen that the cable market still has infrastructure projects such as power grids as the backing, but generally the winning bidders are mostly large-scale enterprises with strong capital. The orders and starting levels of these enterprises will continue to be maintained. According to the monitoring data of the Fubao Copper Research Group, the large-scale cable enterprises in Zhejiang Province started an average of 85%, which was flat compared with the April level. In the case of the SMEs' gradual decline in the peak season, the number of orders started to fall slightly. Therefore, the copper consumption of the cable industry in the later period still needs to rely on the support of the national infrastructure.

Fourth, futures market analysis and forecast

This week, the price of copper fell back, the 60-day moving average caused a lot of pressure on prices, and the rebound momentum gradually weakened, as shown in the following figure:



In the United States, the annual sales of NAR in April increased to 4.97 million, the highest since November 2009. In April, the annual sales of new homes increased to 454,000, and the monthly rate increased by 2.3%. The data continues to corroborate the steady recovery of the US real estate sector. Although the Markit manufacturing PMI fell slightly in May, it still does not change our confidence in the stable recovery of the US economy. The recent FOMC meeting minutes show that most members said that QE will continue until there is more improvement in the economy. Steady easing policy continues to escort economic growth. In May, the PMI in the Eurozone rose to 47.8, although it is still below the line of glory, but as the engine of economic growth in the Eurozone, the PMI of Germany and France rebounded significantly. Under the support of stable and loose monetary policy, the economy ushered in a glimmer of light. But the longest recession in 14 years still does not see a clear end. The side effects of the European debt crisis on the real economy are still difficult to eliminate in the short term. The unemployment rate in countries with heavy debts such as Spain and Greece is as high as 25%. Before the effective measures to deal with physical defects are found, the EU as a whole needs to get rid of the economic difficulties. For a longer time,

After the Spring Festival, the copper price fluctuated and fell, accompanied by the global economic weakness and the ups and downs of the European debt crisis. In mid-April, led by precious metals, copper prices accelerated and hit a 17-month low. As the fundamentals appeared to be positive and the US economic data was significantly revised up, the copper price fell temporarily, and the “double bottom” pattern appeared on the technical level, and the signal of stabilization was obvious. In the process of violently testing the price of copper, we learned that the downstream flight had the action of buying goods; for this reason, the Fubao Copper Research Group conducted a survey on the downstream “Where is the price of copper in 2013?”, a total of 326 industry participants Submitting the answer, the results show that 34% of the industry believe that the bottom of this year's copper price is 48,000 yuan, the largest proportion; another 27.9% of people are more pessimistic, that the bottom will be 40,000 yuan, the other people are roughly distributed at 45,000 yuan and 42,000 yuan The price. Overall, market participants are more pessimistic. The stagnation of the previous price and the lack of demand recovery have brought a great negative effect on their confidence.

From a fundamental point of view, the data shows that the current copper orders show an improvement trend, especially in some large manufacturers, reaching full-load production, both year-on-year and quarter-on-quarter improvement, the industry average is around 85%. However, the performance of cable companies is relatively poor. The average operating rate of large and medium-sized cable companies is around 75%, and small enterprises are even worse. Overall, copper demand has improved, but it is not very obvious.

From the supply and demand level, foreign copper mine mining has been repeatedly stopped, the degree of interference has risen sharply, affecting supply; coupled with the current shortage of scrap copper, the reason: First, the Customs carried out the "Hedge Action", so that the waste copper imports are not over; After the Spring Festival, the price of copper fell, and the scrap copper merchants were holding stocks. Insufficient supply of scrap copper has led to tight supply of raw materials for regenerative smelting and copper processing enterprises. According to the news, after the Penghui Copper Industry and the Northern Copper Industry reduced production, Jiangtong closed 100,000 tons of smelting capacity and entered the maintenance in advance, Qingyuan Yuntong will step into this rank in the near future. At present, nearly one-third of China's refined copper raw materials come from scrap copper. Although the temporary shortage of scrap copper supports the price of refined copper, from the total point of view, scrap copper has not been reduced. After the remediation operation, the stock will continue to flow to the market. Therefore, we still maintain the judgment of the oversupply of copper supply years ago, and the current supply and demand of refined copper is in a state of tight balance.

From the perspective of the trade market, the smelter has been reluctant to sell due to production cuts, overhauls or other reasons, resulting in "insufficient" of refined copper. In the previous two days, Shanghai's spot copper premium was as high as 500 yuan/ton, pushing up prices. We believe that under the economic environment, the positive effects brought by the fundamentals will make this rebound market continue, and the bottom of the quarter is 48,000 yuan.

On the technical side, copper prices are strictly operating within the 20- to 60-day moving average system this week. It is expected that the possibility of a narrow range of volatility will be large, and there is a possibility of a breakthrough next week. Considering macroscopic aspects, fundamentals and technical forms, the copper price will support the range of 7150-7200 USD, the pressure range is 7450-7500 USD, the copper period will be 5.2-5.45 million, the spot copper will be 5.25-5.45 million, and the scrap copper will be 4.85-5 million.

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