February 2020 cable raw materials (copper) monthly report

First, the macro aspect

Domestically,

1.
The Ministry of Industry and Information Technology recently said that more than 30% of small and medium-sized enterprises have resumed work
.
Small and medium-sized enterprises are the largest and most dynamic group of enterprises, an important part of the socialist market economy, and an important foundation of
China's real economy.
By the end of 2018, there were 18.
07 million small and medium-sized enterprise legal persons in China, accounting for 99.
8%
of all large-scale enterprise legal persons.

2.
The Ministry of Commerce recently said that in the next step, the Ministry of Commerce will take multiple measures to further strengthen the service and support
of foreign-funded enterprises under the premise of doing a good job in epidemic prevention and control.
He also said that he will study and introduce new policies and measures to expand opening up to enhance the confidence
of foreign investors in long-term investment and operation.

3.
China's Caixin manufacturing PMI in February was 40.
3 vs 46 expected and 51.
1 in the previous month, the lowest since
the survey began in April 2004.
The production, new orders and employment indices all hit their lowest levels since the survey began in April 2004, bucking the trend and hitting a five-year high
.

4.
According to data from the National Bureau of Statistics, in February 2020, China's manufacturing purchasing managers' index (PMI) was 35.
7%, down 14.
3 percentage points
from the previous month.
Affected by the epidemic, the purchasing managers' index fell significantly in February, and the current resumption rate of enterprises has rebounded rapidly, which will promote the rise of the purchasing managers' index in March
.

International aspect,

1.
Bank of America's team of analysts noted that the world economy is in its weakest year
since the financial crisis as the coronavirus hurts demand in China and other countries.
Global growth will slip to 2.
8 percent this year, down from a previous forecast of 3.
1 percent, which would be the lowest since
2009.

2.
Revised data released by the US Department of Commerce on the 27th showed that the US gross domestic product (GDP) in the fourth quarter of last year grew by 2.
1% on an annualized basis, the same
as the initial data.
Meanwhile, U.
S.
growth for the whole of 2019 grew 2.
3 percent on an annualized basis, the same as the first data, and the slowest U.
S.
growth in three years
.

3.
The number of ADP employment in the United States recorded an increase of 183,000 in February, compared with an expected increase of 170,000, and the previous value was revised down sharply to an increase of 209,000.

ADP's vice president of Employment Data said the job market remained solid, with private sector employment continuing to increase
in February.

4.
The Fed lowered its target range for the federal funds rate by 50 basis points to 1% to 1.
25%, the first time the Fed has cut interest rates
this year.
In order to protect the current longest economic expansion cycle in the history of the United States from the impact of the epidemic
.

Second, the market review

Affected by the spread of the new crown virus in Wuhan, risk aversion quickly heated up during the Spring Festival festival, and due to the grim domestic situation, the first day of trading after the Shanghai Copper Festival fell by nearly 3,000 points; With the tightening of domestic control of the epidemic, the continuous decline in new diagnoses by late February, coupled with the introduction of a number of policies including cash and interest rate cuts, to stabilize the economy and accelerate the orderly resumption of work of enterprises, domestic risk aversion gradually cooled down, pushing copper prices to rebound to 46,500
at one point.
However, by the end of the month, the market reversed again, and Shanghai copper panic selling, the main force fell below 4.
5 to 44,400, to a nearly three-year low
.

In terms of the market, this month's spot copper premium change is large, the opening of the market next year is affected by the low opening of the futures market, at the beginning of the month good copper maintained a slight premium of around 50 yuan, and after the contract change in the middle of the month, the good copper discount was adjusted to around
140 yuan 。 On the whole, at the beginning of the month, there were only a few online quotations from traders working from home, and it was difficult to close the transaction due to tight logistics; Since the 10th, some enterprises have resumed work one after another, and the market inquiry atmosphere has gradually improved, and the holders have been forced to adjust prices and sell goods under financial pressure; Near the end of the month, most of the spot market has resumed work, with the market down, cautious sentiment aggravated, downstream market entry is less, merchants sell goods, inventory accumulation, oversupply situation is more serious, short-term discount situation is difficult to improve
.

In terms of import profit and loss, the window is still closed this month, and the gap remains around 300 yuan / ton, which is little changed compared with a few years ago
.
Under the common difficulty of the epidemic, the Sino-US trade situation was temporarily put on hold, the RMB exchange rate hovered up and down the "7" mark, and the US dollar rose strongly below the 100 yuan mark, affected by panic, the expectation of interest rate cuts in March heated up and fell into a correction
again.

3.
Waste market

Affected by the epidemic this month, most processing enterprises only officially started work at the end of the month, and due to the delay in starting work in the freight yard, the scrap copper market is relatively scarce
.
Holders suffered losses due to stockpiling goods a few years ago, and the wait-and-see mood was strong, and processing enterprises also began to use electrolytic copper as production due to unsuccessful procurement, and the overall transaction of the market was light
.
It is now understood that several large waste markets will also be restored on March 1, and the recovery of processing enterprises is mainly reflected in East China, and the start of enterprises in North China is slightly worse
.
In terms of logistics, Central China recovered about half, and South China and North China were slightly worse
.

Due to the continuous expansion of the global epidemic risk, the financial market is more turbulent, most of the funds are operated in the short term and pay attention to the risks brought by the epidemic to the economy and the metal market, while copper financial attributes are strong, so most of them fluctuate with the market; From the current situation, the domestic supply of electric copper is sufficient, but with the resumption of work and production has also begun to be digested in an orderly manner and there is a reduction in stocks, which is also good for the copper market to narrow the downward space, it is expected that the trend of copper prices is still subject to the impact of the general environment, but the slow recovery of Chinese demand is also conducive to the stability of copper prices, and the recent narrow fluctuations under the short-term operation of capital risks
.

4.
Trend forecast

After the year, the Shanghai copper market was dismal, which was affected by the domestic epidemic during the year, Shanghai copper opened low and bottomed out in three years, and then with the initial results of domestic epidemic control, the overall rebound was slight, but near the end of February, the global epidemic situation spread seriously, the global panic surged to suppress copper prices, Shanghai copper once again fell to make up for the short-term rebound, closing to a three-year low
.
In China, the recent epidemic control effect is better, monetary and fiscal stimulus policies have promoted the recovery of enterprises after the epidemic, and the overall economy is still resilient
.

In summary, in the short term, copper prices are affected by the spread of the international epidemic, and the uncertainty is extremely strong and weak, and it is expected that the Shanghai copper rebound in March will be limited
.
In the near future, it is recommended to observe the further development of the epidemic in various countries, or the situation
may be suppressed first and then increased.
At this stage, it is not advisable to be overly pessimistic, and there is still room for demand in the later period under the premise that domestic logistics and construction have not fully recovered
.
It is expected that the main operating range of Shanghai copper next month will be 4.
35-46,000, and Lun copper will be 5400-5850 US dollars
.

5.
Industry news

1.
Recently, the force majeure application of Qinghai Copper Industry under Western Mining has been approved
by the CCPIT.
It is understood that Qinghai Copper's application this time is mainly due to the impact of the epidemic, and some imported copper raw materials have been stranded in the port for a long time
.

Japanese miner Sumitomo Metal Mining said Wednesday that it plans to increase annual copper production to 300,000 tons
by 2023 through its stake in line with a new long-term vision.
Last November was forecast for current property production of 250,000 tonnes
as of March 31.

3.
Rio Tinto plans to achieve the first production of the Winu copper-gold mine, located in Western Australia, in 2023, and Rio Tinto is currently discussing
these matters with the indigenous people.
Rio Tinto's copper production is expected to be affected by lower grades this year, particularly at the Oyu Tolgoi copper mine in Mongolia and the Kennecott copper mine
in the United States.

4.
Ivanhoe Mines of Canada announced that underground development of its Kakula copper mine in the Democratic Republic of Congo continues ahead of schedule and is expected to begin production
in the third quarter of 2021.
The Kamoa-Kakula deposit is estimated to contain 1.
34 billion tonnes of marked grade grading 2.
72% (80.
7 billion pounds) copper, and 315 million tonnes of inferred grade of 1.
87% (13 billion pounds)
copper.

Japanese miner Sumitomo Metal Mining said it plans to increase annual copper production to 300,000 tons
by 2023 through its shareholding under its new long-term vision.
Last November was forecast for current property production of 250,000 tonnes
as of March 31.

6.
According to the news of Tongling Nonferrous Metal Group, since the resumption of work on February 12, as of March 2, the statistics show that the copper volume of the main product completed by Tongling Nonferrous Yueshan Mining Company in the month of resuming work against the epidemic was 112.
8%
of the monthly plan.
In 18 working days, the copper production plan
for the first month of anti-epidemic resumption of work was exceeded.