February 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
U.
S.
gross domestic product contracted 3.
5% in 2020, the first decline since 2009 and the worst contraction since 1946, as the pandemic reduced consumer spending and business investment
.

2.
Germany's GfK consumer confidence index in February -15.
6, expected -7.
9, previous value -7.
3, affected by the further tightening of new crown epidemic prevention and control measures, the German consumer environment will face a difficult period in the first quarter of
this year.

3.
Eurozone manufacturing PMI final value for January 54.
8, previous value 54.
7, expected 54.
7
.
Manufacturing output continued to expand at a solid pace in early 2021, but growth has weakened to its lowest level
since the recovery began.

4.
The preliminary value of durable goods orders in the United States in January increased by 3.
4% month-on-month, better than the expected increase of 1.
1%, and the previous value in December was revised upward from an increase of 0.
5% to an increase of 1.
2%.

This data has risen for nine consecutive months, and the recovery of US manufacturing is gathering momentum at the beginning of this year
.

Domestically,

1.
According to data from the National Bureau of Statistics, in 2020, the total profit of industrial enterprises above designated size in the country was 6.
45161 billion yuan, an increase of 4.
1%
over the previous year.
The industrial cycle is gradually smooth, market demand continues to improve, and the profits of industrial enterprises have steadily increased
.

2.
According to the report of the United Nations Conference on Trade and Development, the total amount of global foreign direct investment (FDI) fell sharply in 2020, but China's FDI bucked the trend and increased by 4% to US$163 billion, and China surpassed the United States to become the world's largest foreign capital inflower
.

3.
China's Caixin manufacturing PMI in January was 51.
5 vs 52.
6 expected vs.
53
previously.
It was in expansion territory for the ninth consecutive month, but fell to its lowest
since July 2020.
The supply and demand of the manufacturing industry continued to expand, but the pace slowed
down significantly.

4.
According to data from the National Bureau of Statistics, in January, China's manufacturing purchasing managers' index (PMI) was 51.
3%, down 0.
6 percentage points from the previous month, and it was above the critical point for 11 consecutive months, indicating that the manufacturing industry continued to expand, but the pace slowed down
.

Second, the market review

Copper prices rose all the way in February, breaking through the 70,000 mark at the end of the month, a new high in 9 years, and the main 2104 contract of Shanghai copper closed at 67,950 points, an increase of 17.
26% or 10,000 points
.
During the Spring Festival, Shanghai copper closed market, London copper continued to rise, overseas epidemic inflection point, economic recovery expectations continue to strengthen, coupled with the United States 1.
9 trillion stimulus policy approaching, loose monetary policy environment continues, the market panic for the expansion of unified goods, during the end of the month to greatly boost the stock market, as well as crude oil, copper led by commodities, this month have a bright performance
.

In terms of the market, spot copper soared by 10,360 yuan this month, and the premium first rose and then fell, and good copper remained around 100 yuan at the end of the month
.
Shanghai copper achieved eleven consecutive rises, due to the impact of the domestic Spring Festival, the market is basically in a holiday atmosphere, including this period after the year, the start of construction has not fully recovered, coupled with the rising market, buying stop is more common, the spot market is mostly for the holder to adjust the price of the dump, the supply is abundant, the supply exceeds demand to promote the premium continues to decrease, on the afternoon of the 26th with the decline of the market, buying into the market only to increase, it is expected that with the gradual recovery of consumption, the discount in March will gradually narrow, or there is a premium situation
。 In terms of import profit and loss, the US index is sorted out at a low level, domestic consumption has entered the Spring Festival holiday, copper prices are strong outside and weak inside, the import window is closed, and the gap has expanded from 80 yuan / ton at the end of last month to nearly 1,000 yuan
now.

From a fundamental point of view, global inventories are at a low level, but from the perspective of the domestic spot market, the rising market has inhibited downstream demand, and at the end of the month, it continues to accumulate, and the discount has sharply lowered the bearish copper price, and the follow-up needs to continue to pay attention to the recovery of consumption, including when to achieve inventory dematerialization in the previous period after entering the traditional peak season in March; TC of copper ore processing fees at the raw material end continued to be low, and the supply side remained tight to support copper prices
in the medium term.

3.
Waste market

This month, copper prices have soared all the way from the 4th, rising for 11 consecutive working days before and after the holiday, and on the 25th, the main force of Shanghai copper exceeded 70,000, hitting a new high in 19 years, and then entered an adjustment
.
At present, the 2103 contract of Shanghai copper in the month fell at 67850 yuan / ton
.
Spot copper soared 10,360 yuan / ton compared with the end of January, scrap copper soared 9,000 yuan / ton, and Foshan high-quality bright copper reported 60,100 yuan / ton
.
The fine waste difference is around
4500.

Before the beginning of the month, recycled copper enterprises have generally been stocked, and downstream production has been suspended to suppress the market price
of scrap copper.
Merchants gradually closed their work, the flow of domestic traders reduced the price gap between the fixed provinces, and the overall transaction of the market was light
.
During the Spring Festival, the market soared, and after the holiday, the waste markets in various places began to resume work one after another, and most of the copper factories started work in the first eight days
.
Under the upward trend of the market, the mentality of cargo merchants is strong, and the market circulation in the early stage of construction is scarce
.
By the 25th, after Shanghai copper hit a high of 70,000, the price of bright copper on the market generally rose to more than 61,000, and merchants sold their goods, and the inventory of the previous year had been basically cleared
.

Recently, there are many downstream copper scrap arrivals, there are queues for unloading, and the market transaction is hot
.
In the case of the gradual narrowing of the refined waste price difference this month, the sales volume of downstream low-oxygen rod orders has been reduced, and the sales of copper rods have a certain pressure, which suppresses the price
of scrap copper to a certain extent.

4.
Trend forecast

This month, Shanghai copper rose sharply to a new high in recent years, among which domestic prices continued to rise sharply after the holiday, and there was a limit increase
.
At present, in the short-term Shanghai copper price rose sharply, the fundamental demand at the beginning of the year has not been confirmed, the price and time may not match, the subsequent copper price upward process or encounter more pullback process, further wait for the fundamental implementation, the Shanghai copper high is mainly strong, or there is a first decline and then rise, beware of rushing back down
.

5.
Industry news

1
.
Chile's national copper company (Codelco) approved a $1.
24 billion investment to expand production at its underground mine in Teniente, in the O'Higgins region.
Two weeks ago, Codelco also approved the Inca open-pit mining project
at the El Salvador copper mine in the Atacama region.

MMG's copper concentrate production fell by 18.
6% last year, mainly due to labor shortages
at the Las Bambas mine in Peru during the Covid-19 pandemic.
The company produced 312,557 tonnes of copper concentrate and 72,007 tonnes of copper cathode in
2020.

Commodities traders Trafigura Group and Mubadala Investment Co.
are considering selling their Matsa copper mine in Spain because of rising demand for copper
.
The two companies have been discussing the disposal of the Mata copper mine, which could be worth $2 billion or more
.

4.
Zambia's copper production in 2020 increased from 796,430 tons in the previous year to 882061 tons, an increase of 10.
8%, a record high
.
Zambia's mining minister said Zambia's production is expected to exceed 900,000 tonnes in 2021, compared with a long-term target of more than 1 million tonnes
.

5.
An executive at Codelco, Chile's state-owned world's largest copper producer, told Reuters the company saw the recent spike in copper prices as a "good opportunity" to invest in cash and rein in debt, but warned that it could also push up costs
.

6.
Freeport-McMoRan will reach a $2.
8 billion deal with China's Tsingshan Holdings Group to build a copper smelter
in Veda Bay, Indonesia.
The smelter will produce copper pipes and wires, potentially worth more than
$10 billion a year.