July 2020 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
According to data released by the US Department of Commerce, the US GDP in the second quarter fell by 32.
9% month-on-month to the preliminary annual rate, the largest decline since the 40s of the last century
.
The U.
S.
economy contracted sharply in the second quarter, largely due to
a sharp decline in consumer spending.

2.
The recovery of the US labor market is weak, with initial jobless claims last week at 1.
416 million, up 109,000 from the previous week and higher than the expected 1.
3 million, ending a 15-week downward trend
.

3.
Eurozone industrial climate index -16.
2 in July, -17 expected, -21.
7
in the previous month.
Eurozone economic confidence rebounded more than expected in July as pandemic-related restrictions eased, and while consumer confidence remained low, the industrial and services sentiment index rose the most
.

4.
The World Bank expects the global economy to shrink by 5.
2% this year, advanced economies by 7.
0% in 2020, emerging market economies by 2.
5%, and China to buck the
trend.
This is the worst performance
since data became available in 1960.

Domestically,

1.
According to data from the National Bureau of Statistics, in July, China's manufacturing purchasing managers' index (PMI) was 51.
1%, up 0.
2 percentage points from the previous month, and it was above
the critical point for five consecutive months.
Among the 21 industries surveyed, 17 industries PMI was above the critical point, an increase of 3 from the previous month, and the scope of prosperity has expanded
.

2.
National Bureau of Statistics: In June 2020, the national consumer price increased by 2.
5%
year-on-year.
Among them, urban increase of 2.
2%, rural increase of 3.
2%; Food prices rose by 11.
1% and non-food prices by 0.
3%; Consumer goods rose 3.
5 percent and services 0.
7 percent
.
In the first half of the year, the national consumer price increased by 3.
8%
compared with the same period last year.

In March and May, the output of ten non-ferrous metals in the country increased by 4.
1% year-on-year, and the growth rate increased by 1.
9 percentage points
year-on-year.
Among them, copper production increased by 13.
3%, compared with a decrease of 5.
2% in the same period last year; From January to May, the output of ten non-ferrous metals in the country was 24.
13 million tons, a year-on-year increase of 2.
7%, and the growth rate fell by 1.
3 percentage points
year-on-year.
Among them, copper output was 3.
97 million tons, an increase of 2.
7%, down 1.
7 percentage points
.

4.
According to data from the National Bureau of Statistics, from January to June, the total profit of industrial enterprises above designated size in the country fell by 12.
8% year-on-year, and the decline was 6.
5 percentage points
narrower than that from January to May.
The profit growth rate of industrial enterprises continued to accelerate in June, and the profit growth rate of industrial enterprises in the second quarter turned from falling to rising
.

Second, the market review

In July, copper prices continued to rebound, exceeding the high at the end of last year, refreshing a new high in two years, and the main force of Shanghai copper reached 53520 points, a monthly increase of more than 6%.

With the continuation of global loose monetary policy, abundant market liquidity, and the sharp depreciation of the US dollar, the market is optimistic about the investment value of industrial products in the process of economic recovery, and precious metals, stock markets, and copper prices have all performed brilliantly driven by capital
.

On the macro front, the intertwining of long and short is more obvious, the European Union passed the 750 billion euro recovery fund plan, the United States is also preparing for a new round of trillion stimulus, the dollar fell to a two-year low, releasing pressure on London copper; On July 22, the United States suddenly announced that the Chinese consulate in Houston needed to be forcibly closed after 72 hours, and China counterstated on the 24th that it would close its consulate in Chengdu, and the tension between the two sides fell into a freezing point since the epidemic; At the same time, US GDP contracted at an annualized rate of 32.
9% in the second quarter, the largest decline since the Great Depression, and Trump's proposal to postpone the election day is a potential risk factor in the political uncertainty; The official domestic manufacturing PMI recorded 51.
1 in July, better than expected and above the boom-dry line for the fifth consecutive month, which was positive for copper prices
.

In terms of the market, spot copper rose by 2950 yuan this month, the premium first rose and then fell, the current good copper premium maintained around 90 yuan, the market feedback that the supply of domestic good copper is in short supply, traders around Shanghai seek the northern market supply, so the premium reached a peak on the 21st, although the transaction tends to be weak, but the good copper premium is stable around 100 yuan, while flat water copper, wet copper is in the active realization of the holder, there is room for price reduction
.
It is also worth noting that with the continuous decline of London copper inventory, the external market has turned to premium again, which has also promoted the current copper price relative to the external strength and internal weakness
.
In terms of import profit and loss, the window closed again this month, and the gap was close to 400 yuan / ton at most, and it is now maintained around
300 yuan / ton.
Sino-US tensions have heated up again, the dollar has continued to fall, and copper prices are strong outside and weak inside
.

3.
Waste market

Copper prices have recently fluctuated at high levels, and scrap copper prices are unchanged
from last week.
The market fluctuates flatly, the arrival of goods yards is running well, and the willingness to seek price and shipment is enhanced, resulting in the arrival of scrap copper by some downstream manufacturers to improve and the inventory is high
.
In the recent low profit of copper rods, it is mainly based on on-demand procurement, and it is difficult for merchants to raise prices, which is in sharp contrast to the situation at the beginning of the year, and the overall transaction of the market is relatively positive
.
It is also learned that some copper factories in Shandong have stopped production and closed
due to poor profits and local policies.

Recently, the tenth batch of domestic scrap copper import audit landed, a total of 10,110 tons of audit, from the first half of the year data, the audit quota in 2020 has increased by 30% compared with the 19-year annual audit quota, but on the other hand, the new domestic scrap copper import policy has not yet landed, shipping companies have refused to transport, the actual arrival of scrap copper in the first half of the year fell by about 46%.

4.
Trend forecast

Shanghai copper continued its rebound this month, rising to the 54,000 mark during the month, and then lacked momentum, falling into a high volatility range at the end of the month
.
In the last stage of Shanghai copper affected by the epidemic, the domestic just need to start work to release copper demand, short-term demand surge with Shanghai copper to form a repair rebound, in the case of the spread of the epidemic in South American countries in July, Chilean copper concentrate supply shortage and domestic midstream production capacity continued to release to form a price further driving force, but it is worth noting that the current is the traditional demand for Shanghai copper off-season, the last stage of capital into the market or become the main reason for price guidance, copper by the stock market, dollar index and news surface impact strengthened, high amplitude or expanded
。 In the short term, with the intensification of Sino-US friction and changes in the gold and silver market, the news in the demand off-season will be reduced, and the probability of moderate upside of copper prices will increase, and then the market will return to fundamentals, the copper market in August may maintain a high volatility pattern, and the upper space will temporarily open to the previous high of around
54,000.

5.
Industry news

BHP said it expects its copper production to fall by 5-14% in the 2020/2021 fiscal year (July-June), with a production target of 148-1.
65 million mt, down from 1.
72 million mt
in the 2019/2020 fiscal year.
The decline in production was due to the impact of
a reduced workforce related to pandemic restrictions.

2.
Rio Tinto announces its first resource estimate at its Winu copper-gold mine in Patterson, Western Australia
.
The pro forma ore resource is 503 million tonnes at 0.
35% copper, 0.
55 g/t gold, or 0.
45%
copper equivalent.
At a cut-off grade of 0.
45%, the Venu high-grade ore resource is 188 million tonnes at a grade of 0.
68%
copper equivalent.

3.
Glencore's Mopani copper mine in Zambia said the coronavirus pandemic and low copper prices prompted the company to recommend suspending production, but this proposal was rejected
by the Zambian Ministry of Mines.
Previously, the mine suspended mining in April, but resumed operations
in early May after the decision sparked strong opposition from the Zambian government.

First Quantum has been approved to resume operations at its Cobre Panama copper mine
.
In early April, the mine was ordered to close due to
cases of coronavirus infection.
The project will reach full production
by mid-August.

5.
It is reported that Antofagasta has reached an agreement with Tongling Nonferrous Metals and Jiangxi Copper on the 2021 copper concentrate supply agreement, which will provide copper concentrate supply
to refiners in the first half of next year.
The final negotiated TC/RC was $60.
8/ton and 6.
08 cents/lb
.

6.
Global mining giant Rio Tinto said it has reached an agreement with Mongolia to power its Oyu Tolgoi copper-gold mine in Oyu Tolgoi through its state-owned coal-fired power plant in Tawan Tolgoi
.
The plant was built to power the Oyu Tolgoi project so that it can be put into service
within the next four years.