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

Macro: Abroad, recently, European and American PMI data hit a multi-year high, reflecting strong economic momentum, while US non-farm wages grew well, coupled with rising crude oil prices, global reinflation is expected to continue
.
In addition, Trump's 2018 State of the Union address, when it comes to infrastructure construction, focused on simplifying the approval process for infrastructure, which may mean that U.
S.
copper demand will grow earlier than market expectations, and new infrastructure investment of at least $1.
5 trillion is also higher than previous market expectations
.
Domestically, there have been important marginal changes in domestic real estate sales policies, and the growth rate of real estate investment is expected to be revised upward throughout the year
.
At the same time, the Ministry of Housing and Urban-Rural Development announced that 5.
8 million shantytowns will be renovated in 2018, exceeding market expectations and similar to 2017, and once again emphasizing support for rigid and improved demand
.
On the whole, the recent global macro economy continues to be optimistic, and the weak demand caused by the consumption off-season is the fundamental logic
of the price decline.

Market: The weak correction in copper prices this month has not led to a recovery in market demand
.
As far as the overall situation within the month is concerned, the market's acceptance of copper prices above 53,000 is generally not high, and only when copper prices fall below 53,000 will downstream demand show a more obvious improvement
.
On the one hand, the high copper price limits the enthusiasm of the downstream stocking, and on the other hand, the falling copper price also makes the market worried about the performance of copper prices in the next year, so the market demand performance in January is not ideal, and there is no obvious stocking tide
as in previous years.
At present, there are only a few days before the Spring Festival, unless copper prices get out of the sharp decline, otherwise downstream demand may not improve significantly during the year
.

Inventories: As of January 31, the total refined copper inventory of global exchanges increased by 127,600 tons month-on-month to 689,900 tons
.
Among them, copper stocks on the New York Mercantile Exchange increased by 09,900 tons to 221,000 tons; copper stocks on the Shanghai Futures Exchange increased by 13,700 tons to 164,200 tons, and the ratio of warehouse receipts cancelled decreased by 2.
24 percentage points to 69.
65%; Copper inventories on the London Metal Exchange surged by 108,000 tonnes to 304,700 tonnes, and the rate of warehouse receipts cancelled decreased by 0.
3 percentage points to 21.
2%.

During the month, LME copper inventories rose sharply for several days, triggering a sharp drop in copper prices, mainly due to
the concentration of large traders.
February coincided with the New Year holiday, downstream consumption continued to shrink, accumulation will continue, and the current inventory level is more stressful than in previous years
.

In the future: the focus of the recent market is on the sharp increase in LME copper stocks, and according to past experience, copper prices are likely to rebound
as the inventory increase ends.
In terms of the market, there is no significant improvement in fundamentals, China's refined copper supply is still relatively abundant, while consumer demand continues to fall, in the macro environment, China's economy is resilient, optimistic expectations are still there, while the pressure on the US dollar index and the strength of crude oil prices, it is expected that there will still be some support
for copper prices in the later period.
It is expected that the driving logic in February lies in the macro and industrial game, copper prices are likely to fluctuate, and the market triggers waiting for the downstream recovery
after the holiday.