June 2020 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The United States added 4.
8 million jobs in June, the unemployment rate fell to 11.
1%, and the number of initial jobless claims in the United States fell for the 13th consecutive week in the week to June 27, exceeding 1 million
for 15 consecutive weeks.
Nonfarm payrolls in the United States rose by 4.
8 million after the June seasonally adjustment, a record high
.
The US unemployment rate recorded 11.
1% in June, the second consecutive monthly decline
.

2.
The final value of the Markit manufacturing PMI in the United States in June was announced: 49.
8, and the previous value: 49.
6
.
U.
S.
manufacturing activity rebounded in June, with the ISM manufacturing PMI reaching its highest level in more than a year as the overall economy reopened, indicating that the U.
S.
economy has improved after entering a recession in February, although rising infections still threaten
the recovery.

3.
The preliminary annual rate of Eurozone CPI for June released on June 23, announced value: 0.
3%, previous value: 0.
10%, expected value: 0.
1%.

Eurozone CPI June MoM, Announced: 0.
3%, Previous: -0.
10%, Expected: 0.
2%.

The data showed a modest rebound in annual inflation in June, but the core data was still nowhere to be found – falling to its lowest level since May 2019 – just like in years past, so that hasn't changed much
.

4.
The OECD predicts that the world economy will shrink by at least 6% in 2020, bringing heavy economic costs to measures taken in response to the pandemic; The global economic outlook remains highly uncertain, with a 7.
6%
decline in the event of a second wave.

Domestically,

1.
In June 2020, the manufacturing purchasing managers' index, non-manufacturing business activity index and composite PMI output index were 50.
9%, 54.
4% and 54.
2%, respectively, higher than the previous month
.
Among them, China's official manufacturing PMI recorded 50.
9 in June vs 50.
6
in the previous month.

2.
China's Caixin manufacturing PMI recorded 51.
2 in June, compared with 50.
7 in the previous month, the highest since
December 2019.
The domestic economy continues to repair in the post-epidemic era, and the supply and demand sides are improving simultaneously
.
In mid-June, the epidemic rebounded in some areas, but the impact on the overall economy was relatively limited, and enterprises were full of confidence in the further relaxation of control measures and the normalization of
economic activities.
Employment pressure still cannot be ignored, the central government has repeatedly stressed that doing a good job in the "six stability" work, implementing the "six guarantees" task, and finding ways to broaden employment channels.

3.
According to data from the National Bureau of Statistics, from January to May, the national fixed asset investment (excluding rural households) 199194 billion yuan, down 6.
3% year-on-year, 4.
0 percentage points narrower than that from January to April; and increased by 5.
87%
in May.
With the effective development of the investment stabilization policy, the investment in newly started projects continues to show a positive trend
.

4.
Recently, China's economic data for the second quarter will be released
.
In view of the good recovery from the impact of the epidemic in the second quarter, the recovery of production, and the gradual recovery of investment and consumption, many relevant people believe that the GDP growth rate in the second quarter has a high chance of turning positive
.
Judging from the high-frequency data and PMI data in June, the overall economic momentum in the second quarter is still further improving
.
Although it is still affected by the epidemic, it has gradually returned to normal compared to the first quarter
.
The resumption of work and production has also been basically achieved, and the PMI has been above the boom-dry line for four consecutive months, with good
momentum.

Second, the market review

In June, Shanghai copper entered a strong rebound stage, the more the rebound was earlier, the main reason may be the recovery of the domestic economy, the increase in industrial copper demand, the continuous outflow of electrolytic copper stocks in the previous period, bringing about a demand-side impact
.
On the other hand, Chilean copper concentrate disturbances are frequent, although copper mine production is still maintained at the same level in the same period, but the further spread of the epidemic has formed signs of workers' strikes, copper concentrate processing fees TC remain low, supply may be expected to be tight, midstream capacity expansion and upstream supply reduction to copper prices to bring monthly thrust to form a sharp rebound
.
There were also signs of recovery in the international industry in June, with the latest U.
S.
employment reaching a record high and unemployment further converging, reflecting the gradual easing of the main shocks of the first wave of the epidemic
.
It is worth noting that the off-season of copper demand is coming, and the inventory in the previous period has restarted, and whether terminal demand can be revived has become the main concern of the market
.

In terms of the market, spot copper rose by about 5,200 yuan this month, and the average monthly premium price remained at about
100 yuan.
During the month, the good copper premium once fell to the discount, and with the upward trend of Shanghai copper, the premium rose again
.
Towards the end of the month, traders' willingness to dump goods increased, and the price
fell again low.
At present, the off-season of Shanghai copper consumption has arrived, and the electrolytic copper in the previous period has returned to the reservoir stage, restricting further high water
premiums.

In terms of import profit and loss, the average price of imported copper profit and loss this month was -20 yuan / ton, and at the beginning of the month, with the decline of premium, the import loss expanded to 300 yuan / ton, and the upper and lower limits of profit and loss within the month were nearly 600 yuan
.
Near the end of the month, Shanghai copper returned to the pattern of internal strength and external weakness, but it is worth noting that with the gradual recovery of European and American industries, LME copper stocks began to flow out, while the electrolytic copper stocks in the previous period returned to the warehouse, and the import window may have a tendency
to close.

3.
Waste market

In June, Shanghai copper rose sharply, prices have returned to the previous level, scrap copper stocks were gradually released this month, and market trading further recovered
.
However, it is worth noting that the window for imported copper scrap continues to close, and the overall supply of copper scrap is still tight
.
In the first half of the year, scrap copper imports shrank by nearly half, and the new policy for recycled copper imports has not yet landed near July, and the restrictions have been further strengthened, which has a certain impact
on the supply side of refined copper.

It is understood that the current downstream recycled copper manufacturers production is good, the overall output compared with May has been partially reduced, when can still maintain the same period of the previous year, the overall purchase enthusiasm is good, manufacturers have generally accumulated scrap copper inventory, but the price receipt situation is gradually reduced
.
In the downstream, the inventory of years ago has been basically released this month, the market trading flow level has further recovered, during the period of copper continued to rise, the purchase price of copper scrap in the north and south expanded, and the purchase price of merchants once exceeded that of manufacturers
.

4.
Trend forecast

This month, copper continued its previous strong trend, the rebound range further expanded, the price has returned to the previous level, copper rose nearly 5,000 yuan
in the month.
China's economy is recovering from a sharp contraction caused by the pandemic, thanks to policy stimulus
.
However, with the arrival of the off-season, there is an expectation that the demand margin will weaken, and the overall order volume of copper will decrease, paying attention to the subsequent inventory decomposition; In addition, the risk of supply at the mine end is not reduced, the epidemic in South America is still spreading, some construction projects are slowing down, and the potential increment is limited
.
The macro side is intertwined, the main support comes from the fundamentals, and copper prices are expected to fluctuate
at a high level next month.

5.
Industry news

1.
The Chilean Copper Commission (Cochilco) revealed that 5 expansion projects, including BHP Billiton's Spence expansion project, which can be put into operation before 2026, are all facing postponement
due to the impact of the epidemic.

2.
Recently, the Yulong Copper Mine Reconstruction and Expansion Project has fully completed all tunnel boring construction, marking that the "bottleneck" link that restricts the construction progress of the reconstruction and expansion project has been solved, and laying a solid foundation
for the completion of the project on schedule.

3.
Zijin Mining intends to acquire 50.
1% of the equity
of Julong Copper through its wholly-owned subsidiary, Tibet Zijin, by investing 3.
883 billion yuan in cash.
Julong Copper has a total of 7,957,600 tons of copper metal and 370,600 tons of associated molybdenum metal, while there are also a large number of low-grade copper (molybdenum) resources
in the porphyry body.

4.
Mining companies in Zambia, Africa's second-largest copper producer, suffered a 30 percent drop in revenue in the three months to April, and the impact is likely to last for at least 12 months
due to the pandemic.
Severe global travel restrictions to curb the spread of the pandemic have hit mining supply chains and hindered copper exports and sales
.

5.
Chilean Copper Miners' Union asked to participate in a dialogue between companies and government companies in response to an outbreak
in the world's largest copper producing country.
Despite a surge in cases across Chile in recent weeks, Chile's vast copper and lithium mines have largely maintained continuity of operation
.
Chile's copper industry, one of the least affected by the outbreak, is expected to see a 1 percent
reduction in production, authorities said in May.

6.
The spread of the epidemic, South American copper mine production continues to be disrupted, Chile suspended some construction projects, the world's largest copper mine producer Codelco announced the temporary closure of its second largest mining area Chuquicamata copper smelter and foundry operation, Chilean Mining Commission (Cochilco) expects Chilean copper production to decline by 200,000 tons; Peru announced the extension of the national state of emergency, borders will continue to be completely closed, land, water, etc.
will continue to be suspended
.