August 2020 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
Data show that the final value of the Eurozone manufacturing PMI in July was 51.
8 in real terms, 51.
1 in forecast, and 51.
1
in the previous month.
Eurozone manufacturing PMI final value hit its highest
since November 2018 in July.
Eurozone factory reports showed a very positive
start to the third quarter.

2.
Data show that the US ISM manufacturing PMI in July actually released 54.
20, a new high since March 2019, expected 53.
5, the previous value of 52.
6; the employment index actually released 44.
30, the previous value of 42.
1
.
U.
S.
manufacturing data slightly beat expectations, but employment data remained subdued
.

3.
Germany's July IFO Business Status Index: 87.
9, prior: 84.
5, estimate: 86.
6
.
German think tank IFO economists said that Germany is more or less on the recovery track, but the recovery is still relatively fragile
.
GDP growth is expected to be about 7%
in the third quarter.

4.
Revised data released by the U.
S.
Department of Commerce showed that U.
S.
gross domestic product (GDP) fell 31.
7 percent on an annualized basis in the second quarter of this year, up 1.
2 percentage points from the initial data, and still the largest decline since quarterly data began in 1947
.

Domestically,

1.
China's Caixin manufacturing PMI in July was 52.
8, the highest in nine and a half years, expected to be 51.
1, compared with 51.
2
in the previous month.
The rebound of the local epidemic in July did not change the general trend of overall improvement in China, and the economic repair is still continuing, and the supply and demand sides are improving simultaneously
.

2.
According to data from the National Bureau of Statistics, in July, the added value of industries above designated size in the country increased by 4.
8% year-on-year, and the growth rate was the same as in June; It increased by 0.
98%
month-on-month.
From January to July, the added value of industries above designated size in the country fell by 0.
4% year-on-year, a decrease of 0.
9 percentage points
from January to June.

3.
According to the National Development and Reform Commission, in July, the electricity consumption of the whole society in the country increased by 2.
3%
year-on-year.
Among them, the primary industry, tertiary industry and residential electricity consumption increased by 11.
6%, 5.
3% and 13.
8% respectively year-on-year; Electricity consumption in secondary production decreased by 0.
7% year-on-year, mainly due to the decline
in electricity consumption in high-energy-consuming industries such as electric power, building materials and steel.

4.
According to data from the National Bureau of Statistics, in July, the total profit of industrial enterprises above designated size in the country increased by 19.
6% year-on-year, 8.
1 percentage points faster than in June, and has increased year-on-year for three consecutive months, and the growth rate has accelerated
month by month.
The operation of the industrial economy continued to improve, and corporate profits continued to grow rapidly
.

Second, the market review

In August, copper prices first fell and then rose, and copper prices showed external strength and internal weakness
.
From a fundamental point of view, Peru's mining production began to gradually recover in May, Chile's copper production increased slightly in the second quarter, and the South American mine end was weakened by the impact of the epidemic, and the hype enthusiasm weakened
.
However, the current copper concentrate processing fee TC remains low, LME inventory fell below 90,000 tons, domestic gold nine silver ten peak season consumption is expected to be good, coupled with the second half of the year State Grid still has the goal of catching up with the progress, the basic copper price still plays a supporting role
.

On the macro front, the manufacturing PMI data of various countries in August maintained expansion, of which the increase in new orders was obvious, the market was optimistic about the progress of domestic economic recovery, and the stock market continued to rise; In addition, the Fed released a dovish tone, the market interpretation maintained low interest rates, and the dollar index opened up space below, which was positive for non-ferrous metals
.
The risk factor is that the diplomatic contradictions between China and India and China and the United States have been stimulated again, and caution has restricted short-term copper prices and adjusted the range
downward.

In terms of the market, spot copper rose slightly by 120 yuan this month, the premium first rose and then fell, the current good copper premium maintained around 110 yuan, downstream consumption is light, the plate upward period suppresses the premium discount, at the end of the month under the influence of the next month price difference, the lowest copper premium in the month is close to flat water
.
In September, the market is optimistic about the future market, and the premium has rebounded, but the current consumption has not improved significantly
.
In contrast, LME copper stocks continued to decline, and the external market maintained a
premium.
In terms of import profit and loss, the window of this month continues to close, and the gap is close to 800 yuan / ton, which is now maintained around
400 yuan / ton.
The US dollar is weak and difficult to change, the offshore RMB appreciation hit a new high in the year, and copper prices are strong outside and weak inside
.

3.
Waste market

In August, copper prices fell in the first half of the month, all the way down, and in the second half of the month, the overall shock was strong
.
By the end of the month, the market price of scrap copper increased by 1,000 yuan / ton
compared with the previous month.
The market is high quality bright copper around
46,500.
The price range of Foshan bright copper is between
46400-46600 yuan / ton.
The difference in refined waste is around
2400.

This month's copper scrap rose by 1,000 yuan per ton
.
It is understood that the inventory of merchants has been exhausted at high prices years ago, and the market scrap raw materials are in short supply, and the strong price of copper has reduced the profits
of traders.
Merchants prefer to choose downstream manufacturers with high prices and short account periods
.
And brass prices are difficult to rise
.

This month's raw material inventory is significantly lower than last month, in addition, Hebei Tianjin and other places this month manufacturers copper quotation has caught up with Jiangxi, local merchants considering freight and other factors also choose local manufacturers to trade
.
Scrap prices in Henan have risen, and the overall price is on the high
side.
At present, there is also a gap between the supply of goods in the north and south, and Hebei and other places are relatively abundant; Holders are waiting for the price and selling, which makes it difficult for manufacturers to lower prices in the near future, but the problem of account period in various places continues
.
Market feedback due to the increase in anode plate processing fees, forced scrap copper smelting anode plate enterprises to stop work
.

4.
Trend forecast

In August, copper prices fell slightly from a high level, the supply-side disruption caused by the epidemic weakened, and the mine end is gradually recovering, but the short-term TC maintained a low operation, and the raw material end was tight to support copper prices, but the hype enthusiasm faded; LME inventories continue to decline, and have now fallen below 90,000 tons, while the external market maintains a premium situation, coupled with the expectation of peak season in the domestic gold nine silver ten, the fundamentals are favorable to the rebound of copper prices; On the macro side, the global loose monetary policy continues, and the Fed does not raise interest rates to put pressure on the US dollar, which is good for non-ferrous metals; The Sino-Indian border, Sino-US diplomatic contradictions have intensified again, and the US election is approaching, and risk factors still exist
.
It is expected that the high copper price in September will rise, with the operating range of London copper being 6,500-6,900 US dollars, the main force of Shanghai copper 5.
05-53,500, and scrap copper 4.
58-47,800.

5.
Industry news

1.
According to data from Chilean government agency Cochilco, copper production at the Escondida project, the world's largest copper mine, climbed to its highest level since October last year in June, reaching 105,800 tons
.
Copper production at Collahuasi, Chile's second-largest copper mine, increased by 30%
year-on-year.

2.
The CEO of Codelco, Chile's national copper company, the world's largest copper producer, recently said that it expects the ore processing capacity of its Chuquicamata underground copper mining project to increase
rapidly.
The company was previously forced to temporarily suspend work on the copper project, which aims to extend the life
of the century-old open-pit mine.

BHP expects the Spence Growth Option in northern Chile to produce 300,000 tonnes per year in the first four years and is expected to come on stream between December 2020 and March 2021
.
Due to the epidemic, this time has been postponed
from the original July to December this year.

4.
Rio Tinto lowered its FY2020 refined copper outlook due to delays in the restart of smelters at the Kennecott mine in Utah
, USA.
The delay in restarting is due to planned maintenance, and the smelter is expected to operate
within two months.
Annual refined copper production is now expected to be in the range of 13.
5-17.
5t, down from 16.
5-20.
5t
.

5.
Peru, the world's largest exporter of metals, saw its production of copper, gold and zinc plummet in the first half of 2020, undermined
by restrictions to stop the coronavirus outbreak, the Peruvian government said.
Copper producers said copper production in the first half of 2020 was down 20.
4%
compared to the same period in 2019.

Codelco, the world's largest copper producer, has increased production by 2.
5% since June 2019 to 131,900 tonnes
, the Chilean Copper Council (Cochilco) reported.
Chile, the world's largest copper producer, said overall production in the first half of 2020 rose 2.
6 percent to 2.
83 million mt
.