Affected by macro factors, copper prices rose sharply

On the macro front, the risk of short-term default in the United States will be lifted in the short term, but Congress is about two months away from having to address the debt ceiling again and extend the current short-term appropriations bill again
.
The U.
S.
CPI rose for 16 consecutive months, beating market expectations in September, increasing by more than 5% year-on-year for the fifth consecutive month, the highest level
since July 2008.
The September core CPI rose 4% y/y, in line with expectations
.
The higher month-on-month CPI growth in September and the "transitory inflation" rhetoric may further strengthen the Fed's determination
to announce Taper in November.
The US PPI rose 8.
6% year-on-year in September, slightly below market expectations of 8.
7%, and continued to climb from 8.
3% in the previous month, reaching the highest level
since November 2010.
Currently, Citi's Global Inflation Surprise Index has soared to its highest level
since records began in 1999.
Over the past week, Singapore has tightened monetary policy in response to further inflation and Chile has raised overnight interest rates
.
In the context of the current supply chain crisis, energy crisis and inflation, London copper exceeded 10,000 US dollars / ton, the first time
since June.

Domestically, the fourth batch of reserve sales, China's increase in social financing scale in September, and new RMB loans continued to maintain a strong growth rate in August, and the M2-M1 scissor gap showed a widening trend
for five consecutive months.
In September, the PPI rose 10.
7% year-on-year, an increase of 1.
2 percentage points
over the previous month.
CPI rose year-on-year and flattened
month-on-month.
There are three main reasons for high PPI, the first is the tight supply and demand of coal, the second is the rise in crude oil prices and the price rise under the background of dual control of energy consumption, and the third is the promotion
of the four major energy-consuming industries of nonferrous metals, cement, chemical industry and ferrous metals.
Premier Li Keqiang said measures would continue to be taken to prevent the transmission of commodity price increases downstream in the supply chain
.

On the supply side, on the copper concentrate side, the latest copper concentrate TC index continued to rise
.
Chile's national copper company has proposed to supply copper to European customers in 2022 at a premium of $128/premium to futures, raising the European copper premium by 31%.

In terms of electrolytic copper, SMM China's electrolytic copper production in September was 802,900 tons, down 2.
0% month-on-month and up 0.
4%
year-on-year.
Affected by the continuous impact of maintenance and power cuts, domestic electrolytic copper production is expected to be 803,000 tons in October, which will be flat
from the previous month.
According to data released by the General Administration of Customs, China's imports of unwrought copper and copper products in September increased by 3.
1% month-on-month, ending the downward trend, but still less than the same period
of previous years.
In terms of copper scrap, according to Mysteel, with the rise of copper prices, the fine scrap price difference continues to expand, the mainstream area bright copper fine scrap difference from 740 yuan / ton before the holiday to the current 2183 yuan / ton, expanding 1443 yuan / ton, above the reasonable price difference, the expansion of scrap copper economy or will reverse the substitution effect of some refined copper on copper scrap, to a certain extent to alleviate the tight supply of electrolytic copper
.

In terms of consumption, the continued impact of limited electricity, the copper cable operating rate in September was less than expected, and it is expected that the operating rate will continue to decline
in October.
The operating rate of fine copper rod enterprises in September was 71.
83%, and the overall operating rate of copper plate, strip and foil enterprises in September was 80.
71%, both down from the previous month, and are expected to continue to decline
in October.
According to Mysteel, copper pipe production in September 2021 was 110,000 tons, down 8.
4% month-on-month and 1.
4% year-on-year; In September 2021, the capacity utilization rate of copper pipes was 75.
87%, a decrease of 8.
2% month-on-month and a year-on-year decrease of 1.
3%.

In terms of terminal consumption, the passenger car market retail sales reached 1.
582 million units in September 2021, down 17.
3%
y/y.
In terms of premium discount, copper prices have risen sharply in the past week, the spot market has shown a wait-and-see attitude, there are few buying, and the Shanghai copper premium has fallen to the average price discount
.
South China copper premium is relatively firm
due to the continuous decline in Guangdong inventory.

Overall, the macro side is currently affected by the overseas supply chain crisis, energy crisis and inflation, which has driven copper prices up
sharply.
Meanwhile, the Fed's November Taper expectations strengthened
.
On the supply side, the production of electrolytic copper fell slightly due to limited electricity, while the refined waste price spread returned to above the reasonable price difference, and the copper scrap substitution effect reappeared
.
In terms of consumption, the downstream operating rate and terminal data both decreased
from the previous period.
In terms of inventory, the social treasury has gone to the warehouse again, and the inventory inflection point has not yet appeared
.