Analysis of copper price trend in the domestic spot market in August

Macro: Domestically, China's manufacturing PMI index in July was 51.
4, above the dry glory line for 12 consecutive months, the pace of domestic manufacturing expansion has accelerated, and real estate and infrastructure investment will rise
steadily.
The GDP growth rate announced in the second quarter of this year continued to be strong, with a growth rate of 6.
9% better than market expectations, market sentiment is high, and copper prices are expected to remain high in the short term
.
In addition, the recent implementation of strict supervision policies by the state on environmental protection governance, the effect on the market is obvious, boosted by this, related metal varieties are rising, it can be inferred that with the deepening of domestic supply-side reform, it will be beneficial to non-ferrous metals
for a long time.
Abroad, US President Trump's economic policies and dollar trends may also affect copper prices in the second half of the year, and the upside of the dollar index is limited
as the market's expectations of a US dollar interest rate hike have gradually been digested.
If it is based on the optimistic background of the US economy, especially the acceleration of Trump's tax reform and infrastructure stimulus plan, it is expected to rise in line with copper prices
.

Market: Market demand at the beginning of the month was relatively weak, but the downstream had to enter the market to stock up under the condition of waiting for a pullback, so the market transaction improved slightly in mid-August
.
However, the good times did not last long, copper prices after about two weeks of consolidation market has risen again, downstream had to continue to wait and see, overall market demand performance in August is weak
.
On the supply side, the domestic market supply is not sufficient, on the one hand, because the market itself is bullish and willing to sell, merchants can not cover the goods, on the other hand, it is also due to the copper price external strong internal weak pattern is significant, imported copper continues to be in a loss state, the domestic market supply can not be replenished
.
Overall, the domestic market showed a weak supply and demand situation in August, but in the case of soaring copper prices, the low inventory of downstream manufacturers made the market dominance fall into the hands of holders, and with the approach of the traditional consumption season in September, market demand may recover, thus giving holders more reluctant to sell capital
.

Inventory: At the end of the month, London copper inventories continued to decline, with a cumulative weekly decrease of 17,325 metric tons to 223,500 metric tons, a cumulative decrease of 7.
19%.

Shanghai copper inventories fell by 3,862 tonnes to 183582 tonnes, down about 2.
06%, a five-week low
.
As of August 25, the total inventory of the previous period, LME and COMEX was 609,000 tons, down about 190,000 tons from the high of 800,000 tons this year, but still 100,000 tons higher than the 505,000 tons
in the same period last year.
It can be seen that the tight supply at the mine end has not been fully transmitted to the copper end
.
Over time, copper supply and demand will transition
from balance to small shortages.

Aftermarket analysis: Recently, the US economic data performance is weak, the Federal Reserve is more uncertain about the pace of future interest rate hikes, investors are disappointed, short-term caution dominates the market, the US dollar is under pressure and there is no sign of stabilization, and base metals have received some support
.
As the world's largest metal consumer, the recovery of China's manufacturing industry is expected to promote the continued growth of copper demand, while the continuous decline in copper inventories in the two cities makes the "off-season" effect more and more obvious, the tight supply situation is difficult to improve for the time being, and the bullish mentality in the later period of the copper market is still strong
.
In summary, under the support of the slowdown in the growth rate of the mine end and the steady growth of downstream demand, the upward trend of copper prices has not changed, and after September, copper will enter the peak season of consumption, so it is expected that copper prices will be difficult to fall sharply, and the market will remain bullish after that, but it is necessary to be vigilant that the rapid rise in copper prices will inhibit downstream consumption to a certain extent, which will lead to inventory accumulation
.