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Copper prices were volatile on Friday, with the main contract running around
39,000.
After the US dollar liquidity crisis is alleviated, the risk of a plunge caused by selling is suspended, and the monetary and fiscal stimulus policies of various countries stabilize the market in the short term, but the inflection point of the overseas epidemic has not appeared, the recession of the economy is expected to reprice the market, short-term copper prices are still difficult to have a trend upward, short-term rebound should not chase long, futures unilateral temporary wait-and-see, options consider selling wide straddle strategy short volatility, and the market's expectation of VAT reduction is heating up, focusing on positive set opportunities
.
In terms of news, although the Fed provides liquidity to the market through interest rate cuts, unlimited QE and other means, and G7 finance ministers also jointly pledged to stabilize the economy at all costs, the source of liquidity tension (the epidemic) has not been effectively contained, and liquidity runs and deflation expectations cannot be stopped
.
The strong implementation of the policy will only increase the volatility and rhythm of copper prices, but will not change the downward trend
of copper prices.
Industry News:
1.
The latest annual report released by the Chilean national copper company (Codelco) said that copper production in 2019 decreased by 5.
3% year-on-year, its own mine output was 1.
59 million tons, profit decreased by 17% from the previous year to US$1.
34 billion, and direct cash costs increased by 1.
8%.
The decrease in profit was mainly due to lower gross profit, lower copper prices, lower spot sales of copper and molybdenum, and weak earnings from related investments
.
Codelco said in a statement that the poor performance has put Codelco in trouble, as the impact of the coronavirus pandemic began to show
up in Chile.
The pandemic forced Codelco earlier this week to shelve a 10-year, $40 billion plan
to boost production at aging mines.
2.
Zambian Finance Minister Bwalya Ng'andu said on Friday that in the context of the global coronavirus pandemic, the country will suspend import taxes on mineral concentrates and suspend VAT on imported components to support economic development
.
Africa's second-largest copper producer also cut its economic growth forecast for 2020 to 2 percent
from 3.
2 percent previously.
3.
According to foreign media news on the 26th, South Africa's main export terminals will close mineral exports from midnight on Thursday, when the country will begin a 21-day lockdown against the coronavirus, thereby interrupting the copper supply chain
connecting Zambia, a major copper-producing country, with Asian consumers.
Miners in the Zambian Copper Belt usually ship copper overland to ports in South Africa, where copper is mainly exported to China
.
China is the world's
largest consumer of copper.
"All bulk terminals (minerals) will be closed," a statement from Transnet Port Terminal said
.
Transnet Port Terminal was contacted by Reuters, but the company did not immediately confirm that the minerals would not be exported
.
Copper prices have rebounded in the short term, but the downward trend has not changed
.
Since the beginning of the year, copper prices have fallen by more than 20%, entering a technical bear market
.
Led by the continuous fermentation of the main driving logic of the worsening of the overseas epidemic, the downward drive of copper prices in the medium term is still obvious, and it is expected that there will be more room for decline in the later period
.
