Demand is expected to fade and has not yet landed, and copper prices have limited room to fall

Short-term demand expectations have weakened
.
According to the tracking, in April, the actual demand growth rate was only 3.
47% year-on-year, which was lower than the previous forecast of 4.
5%, mainly due to weak copper demand in the power cable field
.
In May and June, because cable copper demand is basically difficult to improve, copper demand is expected to grow at a low rate
year-on-year.
Looking ahead to the third quarter, demand may decline
sequentially.

In terms of fields, the demand for air conditioning is expected to remain until July, and it is estimated that the demand for air conditioning industry will continue to maintain high growth
in May and June.
In the field of power cables, according to the tracking of the State Grid, the key projects of the State Grid in 2017 are, "West Longitudinal" and "Middle Longitudinal" projects, and UHV is still the focus of
work.
Coupled with energy development, peak shaving transformation, pumped storage power stations, power terminal consumption substitution, that is, coal to electricity, oil to electricity, gas to electricity, etc.
, it is difficult for copper demand in the field of power cables to have other performance
.
Overall, the two major demand areas of the copper market, namely electricity and air conditioning, are expected to heat up as
the third quarter approaches.

There may be shortages
of forward supply.
At present, from 2017 to 2020, only Glencore increased copper mine supply
among the top ten copper concentrate companies due to the resumption of production in African mines in 2018.
However, since the total amount is only 200,000 tons, other miners have no production increase projects
.
Capital expenditures are constrained by continued cost reduction efforts, so the outlook for the top 10 copper concentrate producers is generally declining in production
.
In addition to the top ten copper concentrate enterprises, the total increase in production of other mines in 2017 fell to about
208,000 tons.
Although the increase in 2018 increased to 185,000 tons, the overall increase in copper mines was less than expected
.

Overall, the increase in copper mines in 2017 mainly depends on the production of mines that were previously put into production, as well as the possible resumption of production of previously closed mines
.
In 2017, the growth momentum of copper mines was weak, and between 2018 and 2020, almost no new capacity of large mines was put into operation
.
In the long run, the top ten copper concentrate companies will put into production about 800,000 tons in the long term, and in addition to the top ten copper companies, the long-term expected supply is about 750,000 tons, and these mines will be put into operation almost until 2020-2025
.
Since copper supply mainly depends on the limitation of copper concentrate, and copper concentrate is expected to be difficult to effectively form an increment, the year-on-year growth rate of copper concentrate supply will be lower
from 2017.
As long as global copper demand grows modestly at a rate of 2%-3%, copper supply will soon become tight
.

On the whole, it is expected that the trend of copper prices in June is mainly dominated by demand expectations, coupled with the resumption of production at the Escondida mine in Chile, the supply of copper concentrate has improved, and copper prices in June may be dominated by a weak trend
.
However, due to the constraints of tight supply of long-term copper concentrate, it is expected that the room for copper prices to fall is limited
.