December 2020 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
Revised data released by the US Department of Commerce showed that US gross domestic product (GDP) grew by 33.
4% on an annualized basis in the third quarter of this year, but it is still below the pre-pandemic level
.
Consumer confidence fell to 88.
6 in December, the lowest level since August, and the economic outlook is not optimistic
.

2.
Eurozone preliminary manufacturing PMI for December 55.
5, expected 53, previous value 53.
8
.
The economy is now close to stabilizing
after falling into another severe downturn in November due to coronavirus containment measures.

3.
According to the International Monetary Fund (IMF), the dollar's share of reported foreign exchange reserves fell to 60.
4% in the third quarter, up from 61.
2%
in the second quarter.
The dollar still accounts for the largest share
of foreign exchange reserves held by global central banks.

4.
The British economy grew 16% month-on-month in the third quarter, rebounding faster than expected by 15.
5%, the largest quarterly increase since records began in 1955, but could not "fill" the "gap" in the second quarter, and the economy fell sharply by 18.
8%
in the second quarter.

Domestically,

1.
According to data from the National Bureau of Statistics, in November, industrial production recovered steadily, market demand continued to pick up, and industrial product prices continued to rise
.
From a month-on-month perspective, PPI turned up 0.
5%
from flat last month.
From a year-on-year perspective, PPI fell by 1.
5%, a decrease of 0.
6 percentage points
from the previous month.

2.
According to data from the National Bureau of Statistics, in November, the added value of industries above designated size in the country increased by 7.
0% year-on-year, 0.
1 percentage points faster than the previous month, and 0.
8 percentage points
higher than the same period last year.
Industrial production showed a steady and rising trend, the overall trend of improvement, the growth of products continued to expand, and the export of industrial products rose
sharply.

3.
According to data from the National Bureau of Statistics, in December, China's manufacturing PMI was 51.
9%, down 0.
2 percentage points from the previous month, but it was above the critical point for 10 consecutive months, indicating that the manufacturing industry continued to recover
steadily.
Production and demand continued to improve, with import and export indices expanding for four consecutive months and price indices rising to year-round
highs.

4.
According to data from the National Bureau of Statistics, in December, the comprehensive PMI output index was 55.
1%, although it was 0.
6 percentage points lower than the previous month, but it was in the higher economic range of more than 55.
0% for four consecutive months, indicating that the production and operation activities of Chinese enterprises continued to recover in
the near future.

Second, the market review

In December, copper prices reached a new high, London copper intraday broke through the $8,000 mark, Shanghai copper main force up to 59,600, hit a nearly 7-year price high, the current Shanghai copper fell around 57,670 yuan / ton that month
.

On the macro front, Europe and the United States have begun to vaccinate one after another, the Federal Reserve maintains a dovish tone, and the long-stalemated stimulus bill has landed, boosting market risk appetite; In addition, the European Central Bank's bond purchases will be expanded by 500 billion euros, extended for 9 months, and new long-term loans will be provided to banks, which will be boosted by macro favorable funds, and copper prices will approach the 60,000 mark on December 18; Then, with the digestion of good news, the mutated epidemic in the United Kingdom and the United States once again triggered concerns about the slowdown in economic recovery, the spot market turned to a discount before the New Year's Day, and copper prices returned to adjustment at the end of the month, and the medium-term support focused on the main force of 5.
68-57,200
.

In the market, spot copper rose by 390 yuan this month, the premium was steadily lowered, and good copper remained near
Pingshui at the end of the month.
Since mid-December, spot market participants have begun to rest one after another, traders near the end of the year financial pressure increased, selling increased, good copper minimum discount around 140 yuan, coupled with poor downstream demand in the off-season, market trading has been poor
.
Only on December 23, when the market fell to near 57,200 support, buying sentiment was high, and the premium briefly soared to 200
.
In terms of import profit and loss, this month's window only briefly opened at the beginning of the month and the 23rd and 24th, with a maximum of 270 yuan / ton, and a gap of 400 yuan / ton
at the end of the month.
The US dollar continued to hit a new low, the offshore RMB held steady and depreciated slightly, and copper prices continued to be strong outside and weak inside
.

3.
Waste market

At the end of this month, spot copper rose 400 yuan / ton compared with the end of last month, scrap copper rose slightly by 100 yuan / ton or flat, and Foshan high-quality bright copper reported 52,000 yuan / ton
.
The fine scrap gap rose to around
2600.

Near the end of the year, the scrap copper market is abundant, before the end of the year for realization, the current trader level is mainly fast forward and fast out, willing to reduce profits and actively look for cash manufacturers
.
Some merchants have some willingness
to cover goods in the following year's market preferences.
This year, logistics will be stopped early due to the epidemic, copper scrap prices may have a certain degree of motivation to be limited, and copper mills' willingness to raise prices will be reduced
under the abundant supply of goods.

In terms of downstream recycled copper manufacturers, the large arrival volume near the end of the year and the poor payment of finished products, coupled with other factors, have further extended the scrap copper account
.
Implicated in the upstream payment collection of merchants, merchants generally prefer manufacturers with faster accounts and enter the market to sell, and the overall transaction of the market is average
.
This month, due to environmental protection requirements, the industrial industry in Xinxiang area of Henan has stopped production from the 7th, and will continue until the end of the month, and the furnace
will be opened one after another after the holiday.
The Ge scrap market has been temporarily closed, Gongyi scrap copper manufacturers have limited production and stopped unloading, copper scrap in the province has gradually flowed out near the province, and some manufacturers have signs of
high inventory.

4.
Trend forecast

This month, Shanghai copper hit the annual high and lost, and gradually converged in the second half of the month, showing a monthly doji trend
.
At present, China's economic activities are gradually recovering, and demand may recover simultaneously, but the economic outlook in Europe and the United States is still uncertain; Inventories are generally at low levels, demand performance remains strong, production and sales in end markets such as automobiles continue to grow, and copper demand in the power industry remains optimistic
.
At present, due to seasonal and other reasons, substantial copper demand and recovery expectations have not been fulfilled, market confidence has increased the degree of impact on copper prices, in the case of substantive fundamental promotion has not improved, it is expected that next month Shanghai copper bottoming out to stabilize, or there is a bottoming rebound after a strong trend
of revival.

5.
Industry news

1.
Freeport McMoRan has agreed with four Chinese smelters on copper processing and refining fees (TC/RCs) for 2021 at $59.
50 per ton and 5.
95 cents per pound, 4% lower than this year, marking the sixth consecutive decline
in the year's benchmark.

2.
The Zambian government said that Zambia's copper production will increase to 1 million tons
in 2021 due to the growing demand for copper for electric vehicles, rising copper prices, and more small mining plants coming into operation.
Copper production in 2021 will exceed 1 million metric tons, up 13.
6 percent
from this year's expected output of 880,000 tonnes, the mining minister said.

3.
Minmetals Resources (MMG), a subsidiary of China Minmetals Group, reported that production at its Las Bambas copper mine in Peru was affected
after local residents blocked a road for more than two weeks to protest.
The Las Bambas Copper Mine accounts for approximately 2%
of global copper production.
The copper mine produces about 400,000 tonnes
per annum.

4.
Recently, Zijin Mining Serbia Timok copper and gold mine 10,000 tons/day mining and selection project crushing system linkage test, becoming the first subsystem of the project to achieve linkage commissioning, creating good conditions
for subsequent installation engineering and linkage penetration.
The Timok copper-gold mine is scheduled to be completed and commissioned
in the second quarter of 2021.

5.
China's copper imports fell for the second consecutive month in November to a six-month low as favorable price arbitrage windows closed, making metal imports from overseas and bonded warehouses less
attractive, according to the General Administration of Customs.
From January to November, China's copper imports reached 6.
17 million tons, a record high
.

6.
On December 18, 2020, the reconstruction and expansion project of Yulong Copper Mine, the world's highest altitude and the second largest single copper mine in China, was officially launched
.
The project has an annual mining capacity of 18 million tons and generates benefits of about 2 billion yuan per year, and it is expected that after full production in 2022, its scale will become the second largest producing mine in China after Dexing copper mine
.