July 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The US reported that GDP in the second quarter increased by 6.
5% annualized rate in the first quarter, higher than the quarter-on-quarter growth of 6.
3%, but far below the expected 8.
5%.

The analysis believes that the epidemic has been repeated and the fiscal stimulus effect is slightly weak, and the US economic growth may peak in the second quarter and gradually slow down
.
The data confirms the rationality
of the Fed's lack of rush to exit.
U.
S.
stocks rose and the dollar index tumbled
.

February and June US non-farm payrolls data slightly exceeded market expectations
.
US non-farm payrolls increased by 850,000 in June vs an increase of 583,000 in the previous month (after upward revision); The unemployment rate was 5.
9% in June, up from 5.
8%
in the previous month.
US non-farm payrolls slightly exceeded expectations, but the unemployment rate rose unexpectedly, indicating that the effect of US fiscal subsidies is beginning to fade, and economic data in the next 1-2 months may significantly affect the Fed's attitude
.
U.
S.
one-year inflation expectations for the University of Michigan surged to 4.
8 percent in July, the highest level
since June 2008.

3.
On July 7, the European Central Bank announced that it would clearly set the inflation target at 2%, and allow inflation to be too high if necessary, which is the first time in nearly 20 years that the ECB adjusted the inflation target, which can be interpreted as it still has more expectations for the recovery of the euro area economy, which indicates that the short-term monetary policy in the euro area will also continue to be relatively loose and continue to provide guarantees
for economic recovery.

4.
The Eurozone's economic sentiment index in July was 119, the highest in more than 30 years on record, reflecting the strong momentum of recovery after the
epidemic.
European stocks are back to their previous highs, and despite concerns about the rebound of the epidemic, there is no real impact
on crowd activity at this time.

Domestically,

1.
China's GDP in the second quarter was 7.
9% year-on-year, 8% expected, and 18.
3%
in the previous month.
China's GDP in the first half of the year was 12.
7% year-on-year, 12.
7% expected, and 18.
3%
in the previous month.

2.
China announced a 0.
5 percentage point
cut in the reserve requirement ratio of financial institutions on July 15.
After the RRR cut, the financing cost of enterprises will decline, which will have a good role in promoting the demand side, and China's economy is expected to accelerate
again.
Moreover, the short-term monetary policies of Europe and the United States resonate with China's RRR cut, the global economy continues to pick up and is expected to increase, and the macro atmosphere continues to be loose and optimistic
.

3.
The overall trend of China's manufacturing PMI in 2021 was stable, with the official manufacturing PMI in June being 50.
9 and the Caixin manufacturing PMI being 51.
3
.
The official and Caixin manufacturing PMIs fell slightly from the first quarter, but both remained above 50, while the higher Caixin manufacturing PMI indicated that SMEs performed better than large enterprises, and the current operation of China's manufacturing industry is slightly optimistic
.

4.
China's real estate-related data rose sharply in 2021, and although the growth rate decreased from April to June, it was mainly due to the recovery of the real estate industry that began in April 20
.
Overall, compared with 2019, China's new real estate construction area from January to June 2021 decreased by 4%, real estate sales area increased by 17%, and real estate development investment completed increased by 17%.

On the whole, the domestic real estate industry is relatively prosperous, and there is clear support
for the fundamentals of non-ferrous metals.

Second, the market review

In July, copper prices were mainly range-bound, continuing the low trend since the end of June, copper prices continued to oscillate around the 5-day moving average, the market performance was more cautious, and the second half of the month showed a trend of first declining and then
rising.
From the perspective of market performance, London copper performance is weaker than Shanghai copper, and copper prices are temporarily under obvious pressure
.

In the first half of the month, with the tightening of the macro negative monetary policy in the early stage, the domestic price control and dumping of reserves, and the maintenance of some domestic smelters, superimposed on downstream demand replenishment, seasonal inventory decomposition, electrolytic copper premium and other factors brought fundamental support, copper prices maintained a three-week shock
in the range of 6.
8-70,000.
It is worth noting that since the sharp strengthening of inflation data such as CPI and PPI in May, the market's concerns about the dovish turn from QE to hawk have promoted the rebound of the US dollar and the pressure on commodity prices
.
However, until the July Fed meeting, the specific tightening time was not mentioned, tightening concerns were expected to loosen, the pressure of imported inflation was also fed back into the trend of commodities again, non-ferrous metals and crude oil maintained an upward trend at the end of the month, and the main force of Shanghai copper broke through the 71,000 mark, and the gap in early June was around 72,500 under
pressure.

In terms of the market, spot copper in East China rose by 3,450 yuan in July, and the premium rose steadily, and the good copper premium rose from 70 yuan at the end of June to around
400 yuan now.
During the middle of the month, after the sharp reduction of the refined waste price difference, the consumption of some electrolytic copper increased, and by the end of the month, the local premium in Guixi was higher, resulting in a decrease in the outflow of good copper, and then superimposed on the Jinchuan maintenance, the Shanghai trade market good copper supply is in short supply, and the holders are willing to hold up the price strongly.

In terms of import profit and loss, the Fed is relatively dovish, the dollar rally has slowed down, copper prices are strong inside and weak outside, and the import profit window has reopened, maintaining around
100 yuan / ton at the end of the month.

3.
Waste market

This month, Shanghai copper first stabilized and then rose, and it has been range-bound in the middle and first half of the month, and began to rise
sharply in the second half of the month.
Spot copper rose by 3,500 yuan / ton compared with the end of last month, scrap copper rose by about 3,200 yuan / ton, and the difference in refined waste was around
2,000 yuan / ton.

This month, because the Fed meeting did not mention the specific tightening time, tightening concerns are expected to loosen, the pressure of imported inflation has also been fed back into the trend of commodities again, and copper prices have risen all the way by the end of the year, spot and scrap copper have risen by more than 3,000 yuan / ton
.
Copper prices soared, the market supply was tight again, and near August, the downstream stocking willingness increased, the consumption of recycled copper finished products has eased, or the price of recycled copper manufacturers has brought benefits, it is expected that the recent scrap copper to maintain a high price shock pattern
.

It is understood that in the middle and early part of this month, most copper factories in Hebei, Tianjin and other places only maintained inventory used the next day, and Jiangxi region due to the large number of self-pickup from Foshan Dali, inventory can still maintain production, but the profit is not good
.
The heavy rainfall in Henan has a great impact on Zhengzhou, Xinxiang and other places, the road waterlogged traffic continues to be blocked, some communication networks are affected, the local copper factory has stopped production for several days, and is currently actively resuming production; Hegongyi Xinchang maintained normal production and logistics were relatively stable
.
By the end of the year, some manufacturers in Jiangxi had a lot of delays in payment collection, and downstream processing profits remained low
.
However, due to the continuous rise in prices, holders are optimistic about the future market, and under the mentality of covering goods, although the price scrap has risen considerably, the price is more obvious, and it is expected that the transaction will improve after a slight pullback on the market
.

4.
Trend forecast

At present, the fundamentals have improved
significantly.
Domestic inventories have rapidly dematerialized to historically low levels, and the price structure has also turned strong across the board
.
The short-term bearish eased, and the second batch of reserves landed, which was still less than market expectations in terms of quantity, and the short-term bearish was eased
.
However, the national reserve of copper is relatively sufficient, and the policy pressure of the state to regulate commodity prices in the medium term still exists
.
Overall, the recent copper fundamentals have improved significantly, and the technical aspect has once again stood on the 60-day moving average, and under the continuous increase in funds, the trading logic may turn to the peak season expectation under low inventory in advance, and copper prices are expected to run
strongly in the short term.

5.
Industry news

1.
The No.
29 National Reserve threw away 30,000 tons of copper, because the difference in brand and production period was very large, and the bidding price was very
different.
From the first batch of stockpiles, the actual pickup was two weeks later, which had little impact on short-term
spots.
After the dumping of storage, the downstream resumed normal procurement, and the bearish release was released
.

2.
Chile's Escondida trade union called on workers to vote on strike against the new contract
submitted by management.
Voting will continue until the end of the week
.
Keep an eye on progress
.

3.
LME inventories increased by 4,950 tons, an increase of 10,000 tons in two days, concentrated in Asian warehouses
.
However, China's spot imports remain profitable, bonded warehouse receipt premiums continue to recover, and LME inventories may end the growth trend
.
Keep an eye on LME inventory and spot discounts
.

4.
Domestic copper production continued to be high in 2021, with a sharp increase of 15.
3% in the first four months compared with 2021, hitting a new record high
.
Copper production in May-June fell slightly from April, and domestic copper production from January to June increased by 12.
2%
year-on-year.
Domestic copper supplies remain abundant
.

5.
Jiangxi Copper Company plans to invest in the construction of 100,000 tons/year copper foil project products for lithium battery copper foil, the company has built two production lines, part of which is conventional copper foil, with a production capacity of 15,000 tons/year; The other part is copper foil for lithium batteries, with a production capacity of 15,000 tons / year, which was completed at the end of last year and is now in the commissioning stage
.

6.
In the week ended July 23, 2021, China's copper concentrate processing and refining costs (TC/RC) continued to rise, as domestic smelters had already stocked up on the copper concentrate needed by the end of August, so the appetite for procurement was low
.
Industry sources said that loose supply and weak purchase demand continued to boost TC/RC higher
.
Most smelters have fully ordered the copper concentrate needed for July and August
.
Demand for deliveries after September declined on expectations of increased supply of copper concentrate
.