Copper prices remain high and oscillating off-season effects still restrict market performance

On the supply side, the global copper mine supply side is gradually recovering
.
On June 11, the Spence copper miners in Chile, a subsidiary of BHP, reached a collective bargaining agreement, and the risk of a strike was avoided
.
The Cukaru Peki Upper Zone mine at the Timok copper-gold mine in Serbia came on stream
in the fourth quarter of 2021.
Glencore plans to restart its Mutanda Mining copper-cobalt project
in Congo by the end of this year.
While the new expansion comes online, overseas supply is gradually recovering from the pandemic, and optimism is expected that global copper mine production growth will climb to 7%
this year.
The increase in newly expanded copper mines is the main growth driver, with about 60% of the increase released in the second half of the year
.
Overall, the global copper concentrate will remain in a tight balance pattern this year, and the gap is expected to narrow
compared with 2020.

In terms of inventory, as of July 2, the total copper inventory of the world's three major exchanges was 399,200 tons, and the overall global copper explicit inventory is still at a historical low level
in the past five years.
In terms of domestic stocks, electrolytic copper stocks continued to decline in June, falling by 100,000 tons
.
However, the bonded zone inventory has continued the accumulation rhythm since the end of April, the current bonded zone inventory is 440,000 tons, the import profit window is still closed, and the loss range is about 400 yuan / ton
.

In 2021, the planned investment in power grid engineering will be 473 billion yuan, an increase of 2.
8%
over the planned investment in 2020.
From January to May this year, the investment in power grid projects in the country completed 122.
5 billion yuan, a year-on-year increase of 8.
02%.

However, due to the significant year-on-year increase in the price of major raw materials, actual orders declined and actual metal consumption decreased
.
After the fall in copper prices in June, it will boost consumption to some extent, and the operating rate of cable factories is expected to increase slightly by 1 percentage point
.
At present, the overall power investment is weak, and consumption has entered the off-season period, and the order release in the second half of the year is not optimistic
.

As downstream consumption gradually enters the off-season, the contradiction between supply and demand in the later period will gradually ease, and there is not much
room for destocking.
In terms of refined copper imports, China's refined copper imports in May were 29.
14 tons, down 8.
7% month-on-month and 4.
68%
year-on-year.
After hitting an all-time high of 4.
52 million tonnes last year, electrolytic copper imports are expected to decline
sharply this year.

On the macro front, hawkish statements by Fed officials recently predicted that the Fed will raise interest rates
for the first time in 2022.
Domestic monetary policy has clearly returned to pre-pandemic normalcy, and liquidity release has slowed down
.
Domestic fiscal policy remained strong, focusing on recovery
in the pre-pandemic direction.
Under the background of epidemic control and economic recovery, the strength of fiscal policy is no longer increased, and the marginal exit trend is obvious
.
Fundamentally, on the supply side, the current global copper mine supply is accelerating, the supply and demand mismatch in the epidemic is gradually being repaired, and it is expected that the new copper mine supply is expected to continue to accelerate in
the third quarter.
On the consumer side, copper prices have recently fallen behind, and domestic downstream orders have increased, but mainly in terms of just-needed procurement, the off-season effect still restricts market performance, and the downstream replenishment progress
is paid attention to in the later stage.