Analysis of domestic spot copper price trend from January to June 2016

The trend of copper prices from January to June 2016 can be roughly divided into the following stages:

In the first stage, in mid-to-early January, copper prices at this stage showed a downward trend, falling as low as below 34,820 yuan / ton
.
The base metals market came under
pressure due to a sharp plunge in the domestic A-share market in early January, coupled with the poor performance of the official PMI index in January, and the weak macro environment raised concerns about China's economic outlook.
In addition, near the Spring Festival holiday, most manufacturers entered the vacation mode, production suspension and production reduction are more common, downstream production demand has fallen sharply, and copper prices have fallen
.

The second stage, from late January to mid-March, is a period in which copper prices fluctuate and are basically in an upward trend
.
Copper prices rebounded
slightly in late January due to the Federal Reserve's announcement of a pause in interest rate hikes and a sharp rebound in crude oil.
After that, macro favorable support the trend of copper prices, on the one hand, the domestic supply-side reform is expected to heat up, the de-capacity continues, on the other hand, the central bank lowered the RRR, and the monetary environment was loose.

In March, most downstream companies opened the stocking mode for peak season production, and copper prices rebounded in anticipation of improved consumption
.

The third stage, from late March to early April, this stage of copper prices again weak correction, mainly due to the Fed released easing signals, and a number of executives said that the Fed may accelerate the interest rate hike process, after this news, the market panic quickly spread, funds fleeing wildly, copper prices tumbled
.
In addition, the domestic stock market plunged, the copper market demand side of the worry revived, concerns about Chinese consumption became the biggest pressure on the market, coupled with the support below the dollar index has appeared, followed by bearish pressure on copper prices
.

In the fourth stage, from mid-April to the end of April, copper prices won another wave of rebound
.
The Federal Reserve interest rate meeting announced that the US dollar interest rate remained unchanged, in line with expectations, while the domestic economic data in March improved sharply, indicating signs of stabilizing economic growth, and good macroeconomic data ushered in a rise
in copper prices.
In addition, Russia and Saudi Arabia basically reached an agreement to reduce oil production, driving crude oil to rise, and commodities rose sharply for a while, driving copper prices step
by step.

In the fifth stage, starting in May, copper prices fell again, and the weak market continued until June, after which it basically maintained low volatility
.
U.
S.
economic data is performing well, expectations of the Fed's summer interest rate hike are heating up, the dollar index has regained strength, suppressing the price of non-ferrous metals, copper prices are under pressure above, and the trend is volatile and declining
.
Since mid-June, the dust has settled on the results of the British referendum, the Fed's interest rate hike has also been temporarily stranded, and global macro risks have gradually weakened, giving commodity easing environment, copper prices have received some support, but weak demand is still a constraint, and prices can basically only remain low
.

At present, the domestic and foreign economic environment is complex and severe, and the trend of RMB and the US dollar, the Fed's interest rate hike expectations and the trend of the European economy will have an uncertain impact
on the price trend of commodities including copper in the short term.
Looking forward to the second half of 2016, the market environment will still be long and short intertwined, but on the whole, the market is more favorable than bearish factors, especially the Fed's stance has changed, the interest rate hike time has been greatly delayed, easing the pressure on the market, and the improvement of China's external environment will also become one of the positive factors in the second half of
the year 。 With the introduction of global easing policies, China's investment to drive copper demand, may become a new inflection point in the copper market, promote copper prices out of a wave of strong rise, of course, considering that copper consumption is difficult to appear high growth in a short period of time, the weak market pattern will not have a real sense of reversal, market pressure is difficult to eliminate, the resulting huge shock is inevitable, copper price weak shock is still a high probability event
.