July 2022 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The quarterly adjustment of US GDP in the second quarter fell by 0.
9% annualized, marking the second consecutive quarter of negative month-on-month growth
.
From the perspective of sub-items, residents' commodity consumption, enterprise fixed asset investment, real estate investment, and inventory all weakened in the second quarter, dragging down GDP by about 4.
3 percentage points
.
The Fed raised its benchmark interest rate by 75 basis points to a range of 2.
25%-2.
50%, in line with expectations
.
The Fed has raised interest rates by 75 basis points twice in the past two months, the fourth rate hike in the year
.

2.
The International Monetary Fund (IMF) lowered its global GDP growth forecast for 2022 to 3.
2%, compared with 3.
6%
in April.
The risk of recession is particularly acute
in 2023.
The IMF also lowered its forecast for US GDP growth in 2022 to 2.
3% from 3.
7% in April; lowered Japan's economic growth forecast for 2022 to 1.
7% from 2.
4% in April; lowered the Eurozone growth forecast for 2022 to 2.
6% from 2.
8% in April; The Russian economy is forecast to shrink by 6.
0%
in 2022.

3.
The preliminary value of the Eurozone July services PMI was 50.
6, a new 15-month low, 52 expected, 53 in the previous month; the preliminary manufacturing PMI of the Eurozone in July was 49.
6, a new 25-month low, expected to be 51, and the previous value was 52.
1; the preliminary composite PMI of the Eurozone July was 49.
4, a new 17-month low, 51 expected, and 52
previously.

Domestically,

1.
National statistics show that from January to June, the total profit of industrial enterprises above designated size in the country was 4.
27022 billion yuan, an increase of 1.
0%
year-on-year.
From January to June, among the industrial enterprises above designated size, state-controlled enterprises achieved a total profit of 1.
48945 billion yuan, a year-on-year increase of 10.
2%; The total profit of joint-stock enterprises was 3.
19779 billion yuan, an increase of 6.
7%; Foreign-invested enterprises and Hong Kong, Macao and Taiwan invested enterprises achieved a total profit of MOP981.
41 billion, down by 13.
9%; The total profit of private enterprises was 1.
18857 billion yuan, down 3.
3%.

2.
According to data released by the National Bureau of Statistics compiled by the China Association of Automobile Manufacturers, from January to June 2022, the operating income of the automobile manufacturing industry was 4.
08928 billion yuan, down 4.
2% year-on-year, 4.
8 percentage points narrower than that from January to May, accounting for 6.
3%
of the total operating income of industrial enterprises above designated size.

3.
Since the beginning of this year, many cities across the country have introduced policies to relax the property market, releasing a positive signal
to stabilize the property market.
At the same time, with the liberalization of the three-child policy, many cities have introduced relevant relaxation policies
for multi-child families.
According to incomplete statistics, up to now, more than 30 cities in China have given support to multi-child families to buy houses, and the new policies introduced in the real estate market include relaxing purchase restrictions, increasing the amount of housing provident fund loans, and giving housing purchase subsidies
.

Second, the market review

In July, copper prices bottomed out, and the current round of decline began in June for the first time, and London copper fell as low as $6,955, corresponding to the main force of Shanghai copper at 53400
.
As of 3 pm on the 29th, the main 2209 contract of Shanghai copper closed at 60100 points, a monthly decline of 5.
87% or 3750 yuan
.

European and American manufacturing PMI hit another low, while the Fed's hawkish interest rate hike atmosphere is strong, and copper prices broke down at the beginning of the month under the fear of macroeconomic recession
.
Near the end of the month, interest rate hikes landed, market winds changed, weak economic data although confirmed recession fears, but on the other hand, the pace of subsequent Fed interest rate hikes is expected to ease, the worst rate hike situation may have passed, market risk appetite has recovered
.

In terms of the market, the market stopped falling and rebounded, the downstream early shelved demand was gradually released, the transaction atmosphere was warmer than in June, and the copper plant maintenance at the end of the month prompted the supply of goods to be tight, and the premium of Shanghai and Guangdong rose significantly, and it will remain high in the near future
.
In terms of import profit and loss, the Fed hawkish interest rate hike, the US dollar index continued to soar, the volatility of the yuan narrowed, and the import profit window opened within the month, within 200 yuan / ton at the end of the month
.

Overall, August is a vacuum period for the Fed's monetary policy actions, market risk appetite will recover, coupled with the support of the supply side, copper prices still have room
for further recovery in August.

3.
Waste market

In July, spot copper fell by about 2,700 yuan / ton compared with the previous month, and scrap copper fell by about
3,100 yuan / ton.
The difference in refined scrap was around $860, down $170 from June
.

At the beginning of the month, the market fell one after another, the market fear of decline was prominent, the price pressure was obvious, and large traders suffered losses due to more inventory, and their enthusiasm for receiving goods was not high; In terms of copper plants, due to unsatisfactory copper rod sales, thin profits, unable to receive goods at a high price, to insufficient raw materials, it is difficult to maintain daily production, there are furnaces in various regions, production reduction has appeared, and the market transaction atmosphere has plummeted
.

On July 18, the market began to rise, and the market quotation continued to rise, but some traders covered their goods and sold them, and the market transaction was limited
.
As the price of the holders did not rise, and the fine waste price spread gradually widened, there was room for price support, and the recent market recovery, the market fear of decline eased, traders and copper mills raised prices to receive goods, but the overall trading remained weak
.
Downstream orders picked up and there was a rush phenomenon
.
On the 28th, the Fed raised interest rates, and the market continued to rise, and the price of scrap copper reported to about
56100 yuan.
It is understood that the transaction in Fujian, Nanjing, Hebei and other regions is weak, and the daily trading volume of Quanzhou large households is only one-third of the usual, or even less, and they have no choice but to buy electrolytic copper to replenish inventory
.

4.
Inventory

In late July, domestic demand improved and copper inventories accelerated
.
The data shows that the overall range fluctuation of London copper stocks announced by the LME recently, fell again after a sharp increase in inventories on July 19, and the latest inventory level at the end of the month was 130575 tons
.
In the week of July 29, the previous period of Shanghai copper stocks continued to fall sharply, with weekly stocks falling by 26.
46% to 37,025 tons, falling to a six-month low
.

From the perspective of inventory changes, domestic supply and demand showed a tight state in mid-to-late July, and if inventories can continue to deteriorate, it is expected to support a further rebound
in copper prices.
Generally speaking, the continuous decline in domestic and foreign exchange inventories will support the futures price, and conversely, it will be negative for the futures price
.

5.
Industry news

1.
According to the news, Asian demand for copper concentrate is likely to be supported by good margins and increased capacity at Chinese smelters in the third quarter, while clean copper concentrate is expected to be in tight supply, putting downward pressure
on China's processing and refining fees (TC/RCs).
TC/RCs are fees paid by mines to smelters to convert copper concentrates to copper, and the decline in fees indicates a tight
supply of copper concentrates.
In the second quarter of this year, a number of smelters in China restarted idle capacity, which significantly boosted demand
for copper concentrate.
High sulphuric acid prices, which supported refinery margins in the second quarter, are expected to continue in the third quarter, and smelter capacity is now expected to remain high
, market sources said.

Chile's total copper production fell 2.
55% to 478,800 mt
in May, Cochilco said.
Among them: Codelco's copper production fell 6.
3% year-on-year to 142,900 tons, Collahuasi copper mine production fell 15.
4% to 49,000 tons, and Escondida's copper production increased 26% to 106,900 tons
.

3.
Copper production fell 11.
2% year-on-year to 174258 tonnes in May, as production at the Las Bambas mine suspended production from April to early June, dragged down by declining ore
grades, data released by Peru's Ministry of Energy and Mines.
Peruvian copper production from January to May fell 0.
3% year-on-year to 898,175 tons, and Southern Copper's copper production from January to May fell 26.
8%
year-on-year due to declining ore grades.
However, copper production at Glencore's Antamina mine and Freeport's Macmillan's Cerro Verde mine increased by 3.
8% and 12.
6%
respectively over the same period.

4.
The Quellaveco copper mine in Peru, jointly owned by global miner Anglo American and Japan's Mitsubishi Corp, began producing copper concentrate,
the Japanese trading company said.
The project is expected to produce 300,000 tons per year, one of
the few projects in the industry that is of considerable scale.
The Japanese company said in a statement that annual copper production held by Mitsubishi through equity is expected to increase from the current 200,000 tons to 320,000 to 370,000 tons
as new large-scale copper mining projects come online.

5.
Chile's Supreme Court approved the final closure of Barrick Gold's controversial $5.
8 billion Pascua Lama copper-gold mining project
.
The project was shut down by order of the country's environmental regulator in 2018, and Barrick appealed
.
But in 2020, an environmental court confirmed the decision, which included fines
of more than 7 billion pesos ($6.
72 million).
In its ruling, the court said that while Barrick accused the regulator of acting beyond its powers, the court upheld three charges
from the environmental regulator.

First Quantum's total copper production in the second quarter of 2022 was 192668 tons, an increase of 6%
over the first quarter of 2022.
The sequential increase in production was fully attributable to Cobre Panama's record quarterly production, which achieved quarterly records
in production, throughput and production.
Total copper production guidance for 2022 remains unchanged at 790,000 to 855,000 tonnes, with full-year production expected for Sentinel and Kansanshi approaching the lower end
of the guidance range.