August 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
On August 23, data released by financial data provider IHS Markit showed that the US composite purchasing managers' index (PMI) fell to 55.
4 in August from 59.
9 in the previous month, the lowest value in nearly eight months, and has been declining
every month since reaching a record 68.
7 in May.

2.
On August 26, the revised data released by the US Department of Commerce showed that US real GDP grew by 6.
6% on an annualized basis in the second quarter of this year, up 0.
1 percentage points
from the first estimate released last month.
Data show that in the second quarter, US consumer spending and non-residential fixed investment were revised
up from the initial value.
Among them, personal consumption expenditure, which accounts for about 70% of the total US economy, increased by 11.
9%, and non-residential fixed investment, which reflects the investment status of enterprises, increased by 9.
3%.

The U.
S.
Department of Commerce typically makes three estimates
of quarterly economic data.
The revised final economic data for the second quarter of this year will be released
on September 30.

3.
Fed Chairman Powell's speech at the Jackson Hole Annual Meeting was dovish, dispelling the market's expectations
for early QE tapering and interest rate hikes.
This time the Fed has been guiding market expectations, the market has basically had a relatively full expectation of Taper starting this year, and there are three Fed interest rate meetings this year, no matter which time path, the difference in one or two months will not have much impact
on the market.
The next September 3 non-farm payrolls data is very important, and the US debt ceiling, bipartisan infrastructure plan and Democratic budget spending plan are also key points
.

In April, the manufacturing PMI of developed countries was released, of which the preliminary value of the Eurozone manufacturing PMI recorded 61.
5, less than expected and fell 1.
3 percentage points from the previous value; the British manufacturing PMI recorded 60.
1, down 0.
3 percentage points from the previous value; the United States Markit manufacturing PMI recorded 61.
2 in August, also less than expected, down 3.
2 percentage points
from the previous value.

Domestically,

1.
In July 2021, with the continuous and stable recovery of the national economy, the overall stability of industrial production, the continuous improvement of enterprise operating conditions, and the steady growth of profits
.
In July, the profits of industrial enterprises above designated size in the country increased by 16.
4% year-on-year, 39.
2% over the same period in 2019, and an average growth of 18.
0% in two years (based on the same period in 2019, calculated using the geometric average method), 2.
3 percentage points
faster than in June.
From January to July, the profits of industrial enterprises above designated size increased by 57.
3% year-on-year, 44.
6% over the same period in 2019, and an average growth of 20.
2%
in two years.

2.
Data released by the National Bureau of Statistics on the 27th showed that in July, the profits of industrial enterprises above designated size in the country increased by 16.
4% year-on-year, 39.
2% over the same period in 2019, and an average growth of 18.
0% in two years (based on the same period in 2019, calculated using the geometric average method), 2.
3 percentage points
faster than in June.

3.
On August 27, the Ministry of Finance released the Report on the Implementation of China's Fiscal Policy in the First Half of 2021, which clarified the specific measures
for the next step of accurately implementing macro policies and improving the effectiveness of active fiscal policies.
Accelerating the progress of budget expenditure and local bond issuance in the second half of the year, enhancing the financial guarantee of major national strategic tasks, and actively preventing and resolving risks in key areas will provide strong support
for consolidating the positive trend of economic stability.

In April and August, China's manufacturing purchasing managers' index (PMI) was 50.
1%, continuing to be above the critical point, 0.
3 percentage points lower than the previous month, and the expansion of the manufacturing industry weakened
。 Affected by the recent domestic epidemic flood and other factors, the manufacturing purchasing managers' index in August was 50.
1%, down 0.
3 percentage points from the previous month, continuing to remain in the expansion range; the non-manufacturing business activity index was 47.
5%, lower than 5.
8 percentage points in the previous month, falling below the critical point, of which the construction industry was 60.
5%, 3.
0 percentage points higher than the previous month, located in the high economic range, the service industry was 45.
2%, significantly lower than the previous month by 7.
3 percentage points; the composite PMI output index was 48.
9% , down 3.
5 percentage points
from the previous month.

Second, the market review

In August, copper prices fluctuated widely, spot prices were basically higher than futures prices, the average price of spot 1# copper in the Yangtze River at the beginning of the month was 71850 yuan / ton, and fell slightly to 70440 yuan / ton at the end of the month, the overall decline was 1.
96%.

Since reaching the highest price on May 10 this year, copper prices have fallen back, and have been fluctuating between 67,000 and 74,000 yuan
.

August macroeconomic data showed that the downward pressure on the domestic economy increased, China's economic data fell further, the manufacturing PMI fell back to near the boom and bust line for four consecutive months, the demand side continued to drag down the pressure to stabilize growth in the second half of the year, monetary policy is likely to remain loose, infrastructure deposits are expected to support the bottom, and the macro level continues to face the test
of economic recovery and liquidity in September.
In August, the country suffered from extreme weather and the impact of the epidemic, and the overall demand was poor
.
In addition, the US non-farm payrolls data was better than market expectations, triggering the Federal Reserve to narrow expectations, and the dollar index rose sharply, suppressing metal prices
.
In addition, continuous supply disruptions and strikes at many copper mines abroad have raised concerns about copper mine supply shortages, making copper prices firm.

But with the success of the negotiations, most copper mines gradually resumed production and avoided strikes
.
In addition, in late August, when refinery maintenance is basically over, refining and processing fees are rebounding, and sulfuric acid prices remain high, the supply will gradually be more abundant
.

In terms of the market, domestic spot still maintains the phenomenon of off-season, the recent social treasury has gone to nearly 10,000 tons, exchange inventory has also further declined, the domestic season this year, copper stocks will still not have a significant rise on the premise, giving price support
.
Looking back, whether the support effect of the fundamentals can be strengthened needs to be observed by the reaction of LME copper inventory and spot end, LME copper write-off warehouse receipts continue to increase significantly, and the transfer of inventory makes the LME destocking or gradually occurring
.

3.
Waste market

At the end of the month, Shanghai copper rushed back down, and merchants sold more goods, and the bags were safe
.
Due to the shortage of goods in the market, downstream copper enterprises in order to ensure the normal production of furnaces, enter the market to rush goods, copper enterprises in many regions have purchased to the Dali market to pick up goods, and the quotation and the increase in spot range is large
.
With the rise in copper prices, the fine waste price difference has risen from negative value to around
800 yuan.

At the end of the month, South China quoted 1# bright copper 64600-64700 yuan / ton, copper prices rose sharply, boosting the willingness of holders to ship, but the end of the day was abnormally rising, causing holders to turn bullish and hold a wait-and-see state; Downstream waste processing enterprises are relatively cautious in purchasing heights, and purchase appropriate amounts according to finished product orders, and the trading volume of scrap copper is average
.

It is understood that at present, the surrounding area of Xiong'an, affected by the strict control and management of Xiong'an, has affected transportation, and the arrival of scrap copper has decreased
significantly.
And superimposed on the large fluctuating factors of the market, the upstream source end of the price drop does not ship, the surrounding raw material manufacturers are miserable
.
The situation has eased
somewhat as copper prices have risen.
A new batch of central environmental inspections will soon be launched again, this time in five provinces, including Guangdong, Shandong, Hubei, Jilin and Sichuan, and some concentrated markets in the inspection areas have been closed for business
.
According to market news, the merger and reorganization of Gezhouba Group was approved, and the production of a copper rod enterprise in Zhejiang was suspended due to this, and the follow-up progress still needs to be continuously evaluated
.
Due to poor orders and large inventories of finished products, a copper factory in Jiangxi plans to stop the furnace and stop collecting
in the past two days.

4.
Trend forecast

On the whole, due to the overall macroeconomic unsatisfactory and weak demand in August, copper prices are difficult to improve, but supported by supply disturbances, copper prices have been in a wide range of volatility
.
Looking forward, macro caution is expected to further ease, but the inflection point of manufacturing recovery has appeared, the second stage of economic recovery is still facing a certain test, macro level driving is insufficient, the current copper market basic support is strong, supply is less than expected, destocking performance continues to support prices, it is expected that copper prices will have a strong performance in the context of the return of risk sentiment, and the overall range shock trend
will not change.

5.
Industry news

1.
On August 27, according to the National Food and Material Reserve Administration's No.
2 announcement in 2021, it was decided to start putting the third batch of national reserve copper in 2021 in the near future, with a total sales volume of 30,000 tons
.
The person in charge of the Department of Material Reserves of the State Food and Material Reserve Administration said that in accordance with the State Council's executive meeting on ensuring the supply and price of bulk commodities, the National Development and Reform Commission and the State Food and Material Reserve Administration put a total of 50,000 tons of national reserve copper in two batches on July 5 and 29, and all sectors of society responded well
.

2.
Juan Benavides, chairman of the board of directors of Chile's state-owned Codelco, the world's largest copper producer, said that the recent copper market correction is a slowdown
in a long-term sustained growth trend.
Copper has been hit along with other commodities in recent weeks as China's economic growth shows signs of slowing, but has also rebounded strongly over the past few days as initial containment of the highly contagious Delta variant has boosted
market confidence.
In addition to the short-term ebb and flow, copper's strength is supported
by infrastructure spending and the transition to clean energy and transportation, Benavides said.

3.
According to the latest data from the General Administration of Customs, copper scrap imports in July 2021 were 149,400 tons, down 0.
7% month-on-month and up 98.
9%
year-on-year.
The cumulative import volume from January to July 2021 was 970,600 tons, a year-on-year increase of 88.
69%.

4.
In the first half of 2021, Jiangxi Copper achieved an operating income of 226.
794 billion yuan, a year-on-year increase of 54.
30%, and a net profit attributable to shareholders of listed companies of 3.
043 billion yuan, a year-on-year increase of 308.
3%.

In the first half of 2021, the output of copper cathode in Jiangxi Copper Industry was 901,300 tons, a cumulative increase of 12.
58%
year-on-year.

5.
The Ministry of Mines of the Democratic Republic of the Congo released the latest data on August 31, showing that the country's copper sales in the first half of 2021 increased by 10% compared with the same period last year, and cobalt sales climbed by 15%.

In the first half of the year, copper exports and local sales were 871,956 tonnes and cobalt sales were 44,654 tonnes
.

6.
Chile's copper production in July rose 0.
5% year-on-year to 470,262 tonnes in July, according to the latest data released by Chile's National Statistics Institute (INE) on August 31, maintaining a good performance
despite virus-related restrictions.
Chile is the world's
largest producer of copper.
Chilean copper production fell 0.
8% to 3.
3 million mt from January to July.