July 2019 cable raw materials (copper) monthly report

First, the macro aspect

Domestically,

1.
On July 30, the meeting of the Political Bureau of the CPC Central Committee was held
in Beijing.
Regarding the current economic situation, the meeting believed that the economic operation in the first half of the year continued the overall stable and steady development trend, the main macroeconomic indicators remained in a reasonable range, and the positive factors promoting high-quality development increased
.
At the same time, the meeting pointed out that at present, China's economic development is facing new risks and challenges, and the downward pressure on the domestic economy has increased, so we must enhance our sense of danger, grasp the long-term general trend, grasp the main contradictions, be good at turning crises into opportunities, and do our own things
well.

2.
Data released by the China Federation of Logistics and Purchasing and the Service Industry Survey Center of the National Bureau of Statistics showed that the manufacturing purchasing managers' index (PMI) in July was 49.
7%, a three-month high, up 0.
3 percentage points
from the previous month.
This is the first recovery in the index since April, indicating that the economic operation is slowing down
.

3.
The Caixin China Manufacturing Purchasing Managers' Index (PMI) for July released on August 1 recorded 49.
9, up 0.
5 percentage points from June, continuing to be below the dividing line between prosperity and drought, but the decline narrowed
.

International aspect,

1.
On August 2, the Japanese government decided at a cabinet meeting to amend the decree to exclude South Korea from the "white list"
that has set preferential treatment in the management of safe exports.
The amendment still needs to go through multiple procedures such as signature and promulgation, and will be officially implemented
from the end of this month, three weeks after its promulgation.

2.
The Fed announced a 25 basis point interest rate cut at its interest rate meeting on July 31, local time, lowering the target range of the federal funds rate to 2% to 2.
25%, the first rate
cut since December 2008.
At the same time, the Fed also announced the end of the balance sheet reduction policy known by the market as quantitative tightening by two months early
.

3.
The latest data showed that the manufacturing sector in the eurozone contracted for the sixth consecutive month, mainly dragged
down by Germany's deepest recession in seven years.
Eurozone July manufacturing PMI final value: 46.
4, release: 46.
5 Eurozone manufacturing PMI final July was the lowest since
December 2012.

Second, the market review

Macro news is frequent, and copper prices have become
more volatile this month.
At the beginning of the month, the global PMI data in June shrank again, China's official PMI was 49.
4 unchanged from the previous month, still below the boom-dry line of 50; the US ISM manufacturing PMI was 51.
4, a two-year low
.
The Eurozone manufacturing PMI for June ended at 47.
6, extending its downward trend
.
Coupled with the off-season of domestic demand, copper orders were weakened, and copper prices fell as low as 45,600
.
As the market's expectations of the Fed's interest rate cut increased, the dollar fell in the short term, while South Korea, Indonesia and other four countries announced interest rate cuts on the 19th, and the global interest rate cut tide increased market liquidity, which was positive for copper prices to rebound strongly to 48,000, and Shanghai copper hit a new high
in two months.
At the end of the month, the Fed cut interest rates, but Powell's remarks were hawkish, the dollar index strengthened to put pressure on copper prices, and the twelfth round of Sino-US trade negotiations "dispersed", the market was affected by macro factors, sentiment was bearish, copper prices in the short term or will continue to test the previous low around 46,000 support
.

In terms of the market, this month's good copper premium is still maintained at around 100 yuan / ton
.
The off-season of the spot market continues, and downstream enterprises generally focus on rigid demand, but due to the low volatility of the market, holders maintain high prices, the space for price reduction is generally limited, and traders have bargain stocking
.
Towards the end of the month, the willingness of holders to realize decreased, the supply of goods in the market decreased, and the transaction picked up
slightly.
As the market weakens, it is expected that the premium will remain stable and rise
slightly in the later period.

This month's import profit window has opened intermittently, but it is within 50 yuan / ton
.
However, due to the recent strengthening of the US dollar index, Shanghai copper performance is more resistant to decline, copper prices are gradually strong and weak inside, it is expected that the import profit window in August will gradually open, the inflow of import sources may have a certain impact
on domestic spot premium.

3.
Waste market

The macro environment remained tepid this month and could not stimulate a further rebound
in copper prices.
Copper prices generally show a low volatility trend, the main force of Shanghai copper mainly runs around 46500-47000 yuan / ton, and the mainstream price of bright copper in the market is 42700-43000 yuan / ton
.
At present, the price difference of refined waste has narrowed to about 1100 yuan, and the market demand for refined copper consumption has increased, and the demand for scrap copper has weakened
.
The copper recovery zone has risen in scrap copper prices, and the probability of continuous improvement has been reduced
in the near future.
According to Fubao's understanding, the downstream of Jiangxi such as copper rod manufacturers affected by the sudden increase in prices, the overall copper rod orders picked up, boosting the bright copper receiving price, the current overall market supply has increased, the transaction is
acceptable.

Copper rushed back down, but the overall liquidity of scrap copper manufacturers improved, the mentality slowed down, and the market transaction was acceptable
.
The lack of copper rushing in the period has driven the price of scrap copper down, the recovery of copper prices in the early stage has stimulated the industry's willingness to purchase more, manufacturers' orders have increased rapidly, the downstream side has a positive receiving situation, some manufacturers have a strong willingness to increase prices and receive goods, and the overall transaction of the market is
acceptable.
At present, the overall supply of scrap copper in Jiangsu, Zhejiang and other places is tight, and the supply of scrap copper by downstream manufacturers is short, but the willingness to receive goods at a higher price is limited in the off-season of consumption, and the overall transaction of the market is reduced
.

4.
Trend forecast

This month's highlight is the Fed's interest rate cut decision, and global central banks have cut interest rates under the economic downturn, forming a certain positive space in the medium term, but at present, the overall counter-cyclical stimulus has completely landed for a certain period of time, although the US economy is weak, but the Fed's hawkish "preventive" interest rate cut has pushed the dollar index up
。 At present, the manufacturing data is weak on the fundamentals, and the rise of the US dollar index has a certain suppressive effect on short-term copper prices, but the overall downside is limited, and with the dissipation of the consumption off-season effect, the domestic refined copper supply problem appears, the manufacturing data gradually warms up, combined with the counter-cyclical policy stimulus to achieve social production and operation, the possibility of strong copper prices in the medium term increases
.

5.
Industry news

1.
According to data from the Central Bank of Chile, Chile's copper exports in June fell by 15%
month-on-month.
This was due to a two-week strike by Codelco's Chuquicamata copper miners in June, which reduced the mine's capacity, which was only 60%
of its capacity.
The exact impact of the strike on copper production is unclear, but leaders of the Chuquicamata copper miners' association say it will take longer
than expected to resume normal operations.

2.
The China Solid Waste Chemical Management Network under the Ministry of Ecology and Environment recently released the "2019 Tenth Batch of Restricted Category Publicity Form", the 10th batch of restricted imports of copper scrap and scrap application publicity amount of 124,450 tons, which is the second batch of approved enterprise directory and quantity since the implementation of the import license requirements of "Waste Six Categories" on July 1, involving regions including Tianjin, Zhejiang, Anhui, Jiangxi and Guangdong
.
Among them, Guangdong accounted for 73.
68%.

3.
Shengtun Mining disclosed the plan for the public issuance of convertible bonds, and the total amount of convertible bonds issued by the company this time will not exceed 2.
4 billion yuan.

It will be used for the hydrosmelting project of 30,000 tons of electrocopper and 5,800 tons of crude cobalt hydroxide (metal quantity) in the Democratic Republic of the Congo (1.
7 billion yuan to be raised) and supplementary working capital (700 million yuan to be raised).

4.
According to reports, the three main unions of Chile's Chuquicamata copper mine voted to accept the latest salary plan proposed by Codelco, and the two-week strike was over
.
The strike has already affected
the output of the copper deposit.

5.
Vedanta Resources said it had applied to the South African High Court to terminate the liquidation and sale of the Konkola copper mine
by ZCCM Investment.
Vedanta is seeking an interim court order that the liquidation measures taken by ZCCM against KCM violate the Concora Copper Shareholders' Agreement
.
The provisional application will be heard
on 16 July.

6.
The Chilean National Mining Company (Codelco) has once again postponed the full resumption of production at its Chuquicamata smelter, which is expected to resume
full normal production in the third quarter.
The smelter has been shut down for seven months, largely due to failure to meet stricter environmental standards
that began in December.