December 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The Fed accelerated the tightening of liquidity, announced the acceleration of the balance sheet reduction at 3 a.
m.
Beijing time on December 16, and hinted at raising interest rates from April 2022 and three times in 2022 and 2023
.

2.
The Bank of England unexpectedly announced a 15 basis point interest rate hike, and the market had expected to remain unchanged at 0.
1%, which was the first time the Bank of England raised interest rates
in more than three years.
In addition, the ECB's ultra-dovish rhetoric has also converged
.

3.
The worries brought by the Omicron virus have eased, the sharp decline in crude oil inventories has pushed oil prices to continue to rebound, the suspension of Russian natural gas exports to Germany, the sharp rise in natural gas and electricity prices in Europe, and the intensification of the energy crisis, which has supported the prices of crude oil and high-energy-consuming metals, but pay attention to the drag
on industrial production.

Domestically,

1.
On December 9, the National Bureau of Statistics released the national CPI (Consumer Price Index) and PPI (Industrial Producer Price Index) data
for November 2021.
It is estimated that in the 12.
9% year-on-year increase in PPI in November, the tail impact of last year's price changes was about 1.
2 percentage points, a decrease of 0.
6 percentage points from the previous month; the impact of new price increases was about 11.
7 percentage points, the same
as last month.

2.
According to the official website of People's Bank of China, in order to support the development of the real economy and promote the steady reduction of comprehensive financing costs, People's Bank of China decided to reduce the deposit reserve ratio of financial institutions by 0.
5 percentage points on December 15, 2021 (excluding financial institutions that have implemented a 5% deposit reserve ratio).

After this reduction, the weighted average reserve requirement ratio of financial institutions is 8.
4%.

In March and December, China's manufacturing purchasing managers' index (PMI) was 50.
3%, up 0.
2 percentage points from the previous month, higher than the critical point, and the manufacturing boom continued to rise
.
In December, the non-manufacturing business activity index was 52.
7%, up 0.
4 percentage points from the previous month, above the critical point, and the pace of recovery in the non-manufacturing sector accelerated
.
In December, the composite PMI output index was 52.
2%, unchanged from the previous month, indicating that the production and operation activities of Chinese enterprises have generally expanded
steadily.

Second, the market review

Copper prices in December first fell and then rose, as of 3 pm on the 31st, the main 2202 contract of Shanghai copper closed at 70380 points, a monthly increase of 1.
34% or 930 yuan
.

Within the month, the Fed's interest rate decision landed, and the rise of the US index once pulled down the Shanghai copper bottom
.
The European energy crisis continues, and industrial production tentatively promotes the formation of surrounding non-ferrous metals
.
Near the end of the year, the fundamental consumption of the copper market was light, and the low global copper inventory on the supply side and the disturbance of copper mines in Peru brought some support, and the Shanghai copper main was affected by external factors such as the surrounding market and the US index
.

At present, market institutions are different from the trend of copper prices in the next year, and still maintain a pessimistic attitude towards real estate consumption in the following year, and the downstream hoarding sentiment is reduced under the pattern of increasing the shutdown of enterprises near the traditional Spring Festival, or it will have a certain impact on the price dynamics of next month.

In terms of the market, the inventory of the previous period is still at a low level, but near the end of the year, the market trading atmosphere is light, traders mainly return funds, downstream demand is weak, with the rise of the market, the premium is passively lowered
.
In terms of import profit and loss, the premium at home and abroad returned to normal levels, the import profit window continued to open in the first half of the month, and closed again in the second half of the month, and the gap remained around
500 yuan / ton at the end of the month.
Due to the soaring premium at home and abroad, the import price difference fluctuated sharply
this month.
From the loss of 500 yuan per ton of imports at the end of October to the highest loss of 1,500 yuan on the 10th; On the 19th, the import profit reached 2200 yuan per ton, which was lowered to around
100 yuan at the end of the month.

3.
Waste market

Copper prices fluctuated in a range during the month, spot copper fell by 730 yuan / ton compared with the end of last month, scrap copper fell by about 650 yuan / ton, and the difference in refined waste was around
1800 yuan by the end of the month.
At the beginning of the month, the mentality of merchants covering goods is still heavier, because the supply of concentrated markets in various places is lower than the normal level, coupled with the prevalence of short orders of some large traders some time ago, the quotations of larger markets in Foshan, Linyi, Baoding and other places continue to be higher than the price of copper mills, which also compresses the profit margins
of copper rod enterprises in disguise.
In the middle of the month, there was a sharp fall and rise, resulting in the overall market quotation is more chaotic, especially the copper mill quotation is relatively cautious
.
However, because the domestic supply is still relatively tight, downstream copper enterprises demand for scrap copper, especially in North China and other regions
.

It is reported that Jiangxi has recently rumored that the tax reform will be adjusted, copper factories maintain a wait-and-see attitude, in addition, some copper factories in Jiangxi have reduced production, and prices continue to be low, but a small number of copper factories in Shangrao go to Foshan to pick up more goods, showing a willingness to
raise prices.
Prices in Henan and Hubei have recently been higher, attracting inflows
from Linyi and Baoding.
The end of the month is approaching the end of the year, and the shipholders actively ship
.
Overall market trading has picked up
.

It is understood that Hebei Province, Henan Kaifeng, Tianjin and Liaoning Shenyang area environmental protection supervision, Hebei Langfang, Baoding, Tianjin and other areas of recycled copper rod enterprises due to environmental protection warning, ordered rectification of not up to standard, and coupled with the winter games and other reasons, some enterprises stopped production for rectification, part of the local scrap copper source into the surrounding areas
.
Also due to environmental inspections, Henan Xinxiang has been suspended for several days, and only recently resumed production
.

4.
Inventory

At present, domestic copper inventories continue to be low, as copper prices fall, stimulating bargain hunting
.
December originally entered the off-season, but the refined waste price spread was inverted, and the decline in inventory accelerated, highlighting that the overall inventory including refined copper and copper scrap was too low, and the price decline obviously stimulated the consumption of refined copper, making it difficult to increase inventory significantly, and the extremely low inventory continued to support copper prices
.
As of December 10, the total inventory of the four global places was about 391,800 tons, an increase of 02,500 tons from the previous week and a decrease of 352,100 tons
from the beginning of this year.
In the short term, under the extremely low explicit inventory, copper prices are also difficult to show a smoother decline, and it is expected to remain dominated by high volatility
.

5.
Industry news

1.
Customs data showed that China's copper imports rose 24.
3% month-on-month in November 2021, the highest level since March, as copper demand increased
as power shortages eased.

2.
According to the International Copper Research Group (ICSG), the global refined copper market will have a significant surplus
in 2022.
According to the S&P Global report, the ICSG expects a deficit of 42 million mt in 2021 and a supply forecast for 2022 that exceeds demand by 32.
8 million mt.

3.
According to the latest data from the General Administration of Customs, in November 2021, China imported 123.
52 million tons of metal ore and mineral sands, up 5.
4% year-on-year; From January to November, the cumulative import volume was 1253.
61 million tons, down 5.
2%
year-on-year.

4.
At the end of September 2021, copper stocks in China's bonded warehouses were 63,000 tons less than at the end of 2020, and by comparison, 13,000 tons less than at the end of 2020
at the end of August.
Stocks at the end of July were 40,000 tonnes higher than at the end of 2020
.
Stocks at the end of June were 60,000 tonnes higher than at the end of 2020
.

5.
Codelco, a state-controlled subsidiary in Chile, said that the company has successfully completed its copper sales plan in Southeast Asia in 2022 and signed a multi-year agreement
.

6.
Zijin Mining said its Julong copper mine in Tibet has started production, adding a new source
of supply for next year's copper market.