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

Macro: Copper prices rose sharply at the beginning of this month, mainly driven by funds, the domestic commodity market soared across the board, and base metals broke out
across the board.
However, the rise was mainly driven by funds, and there was no substantial benefit, and then the domestic data performed poorly, and copper prices quickly fell back and walked out of the roller coaster market
.
Later, as China's exports in June were better than expected, imports showed negative growth, and Li Keqiang said that "China's economy is basically stable", and hinted that the economic growth rate in the second quarter may be close to 6.
7% in the first quarter, and the good news drove base metals to continue to rise
.
Driven by external factors, copper prices rose sharply when other metals rose sharply, but the overall increase was still limited
.

Market: In July, China's various parts of the country were flooded, the copper market operating rate fell significantly, and the demand for copper was not as good as in June, so the spot copper premium this month was only maintained at flat water or a slight premium
.
In addition, processing enterprises into the production off-season, copper demand may further shrink, although copper prices have maintained a strong trend of resistance, but downstream merchants in the first half of the month almost wait-and-see, a slight pullback before they have the willingness to
purchase.
On the whole, the upstream supply of copper is abundant, while the downstream demand is difficult to increase greatly, supply and demand are difficult to form an effective support in the face of copper prices, and it is expected that copper prices will still face downward pressure
in the later period.

In terms of stocks: as of July 29, LME copper stocks were reported at 209,450 tons, down 13,275 tons or 5.
96% from the end of last week, close to the low set on July 5 this year, but higher than the average inventory value of 190,000 tons during the year; At the same time, as of July 29, the previous Shanghai copper inventory reported 165468 tons, down 9,503 tons from last week, close to the year's low of 155235 tons, and far below the average inventory value of 256613 tons
during the year.
Overall, since the first half of this year, London and domestic inventories have declined significantly, as of July, LME copper stocks fell by 13,000 tons from the beginning of the year; the previous copper stocks fell by 15,700 tons
from the beginning of the year.
It is expected that in the second half of the year, copper stocks will still be mainly
destocked.

Aftermarket analysis: This month, the market is generally disappointed with the economic policies of various countries, and the recent rise in copper prices is mainly boosted by the market's optimistic expectations for macro policy expectations, which means that with the cooling of market optimism, the upside of copper prices has been limited
to a certain extent.
In addition, in addition to the deterioration of market sentiment, the falling oil price has also put a lot of pressure
on copper prices.
The overall performance of the macro environment in August is expected to be relatively stable, market sentiment is difficult to show a large degree of improvement, and high inventories in the oil market also dominate the trend of oil prices, it is expected that copper prices in August will still be dominated by repeated fluctuations in the range, and the operating space may be similar
to July.