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From the observation of China's official PMI sub-indicators, the biggest impact on the supply and demand structure of the copper market is raw material inventory and new order data
.
First of all, from the perspective of raw material inventory, in June 2016, raw material inventory climbed from a low of 0.
47 in the year to 0.
486 in February 2017, and drove the commodity index to increase by 30.
02% at this stage (Shanghai copper rose by 33.
85% in the same period), which fully reflects the industry's shift from passive replenishment to active replenishment, and deduced into speculative replenishment
.
However, in March, with the decline of the raw material inventory index and the stable operation of the data in April, it implied the end
of the company's raw material replenishment cycle.
From the order index, the order index has been running high since September 2016, but it has accelerated in April, reflecting a rapid weakening of market demand and suggesting that the raw material inventory index will come under further pressure, which is obviously bearish
for copper prices.
Interestingly, the stocking cycle of copper processing enterprises is nearly 4 months shorter than that of other manufacturing industries, which is mainly dragged
down by the stocking of copper rod enterprises.
The proportion of copper rods to copper consumption is as high as 53% in processing enterprises, which is closely related
to the investment completion of the State Grid.
In 2017, the planned investment of State Grid was 465.
7 billion yuan (+6.
08%), but in the first quarter, the cumulative investment of the power grid was only 85.
478 billion yuan, and the investment growth rate fell back to 2.
14%, accounting for 18.
4% of the annual investment completion task, which directly affected the reserve progress
of copper rod enterprises.
On the other hand, the remaining 380.
222 billion yuan of investment needs to be completed in the remaining three quarters to achieve the annual target, which means that the monthly investment pull of more than 42.
2 billion yuan can be expected
.
Considering the availability of funds and the impact of the Spring Festival, it is expected that the infrastructure investment data in the third and fourth quarters may accelerate significantly, that is, the support of infrastructure to copper consumption may mainly be in the second half of 2017
.
Compared with grid investment, power supply investment shows a weak growth trend
.
In 2017, the planned power supply investment was 450.
3 billion yuan, and the cumulative completion from January to March fell by 17.
3% year-on-year, and only 38.
41 billion yuan (accounting for 8.
5%)
.
Considering the negative growth of power supply investment in 2016 (down 12.
88% to 342.
9 billion yuan) and the further decline in the completion amount in the first quarter of 2017, we believe that power supply construction may enter a period of deceleration, which means that the boost to copper consumption in power supply investment in the 13th Five-Year Plan may weaken
.
Overall, government-led infrastructure investment currently has limited
support for copper consumption.
The foreseeable increase in demand will come from the improvement of investment in grid construction, which may be reflected in the second half of the year, and it is necessary to focus on the tender situation in power distribution construction; Whether the power supply construction can improve beyond expectations or become a turning point in the market requires paying attention to the power supply bidding situation and the changes
in the reserve of downstream copper rod enterprises.
