June 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
After a two-day meeting, the Fed announced its latest interest rate decision
.
The Fed announced that it kept its benchmark interest rate unchanged in the range of 0%-0.
25%, in line with expectations
.
The Fed's dot plot shows that two rate
hikes will be achieved by the end of 2023.
The statement showed that the interest rate on excess reserves (IOER) was adjusted from 0.
1% to 0.
15%.

2.
The US ISM manufacturing PMI recorded 60.
6
in June.
Some analysts said that in June, the surge in demand pushed US manufacturing output up sharply again, which pushed commodity prices up at a pace not seen in at least 14 years, and it was necessary to increase production capacity and improve supply chains to help ease some inflationary pressures
.

3.
The preliminary Markit manufacturing PMI in the United States recorded 62.
6 in June, continuing to hit a record high; the service industry index fell to 64.
8, but it was still close to a record high
.
In addition, the US current account deficit in the first quarter of the United States, released that night, recorded $195.
7 billion, the highest
since the first quarter of 2007.

4.
The final value of the Eurozone manufacturing PMI in June was 63.
4, exceeding market expectations of 63.
1, higher than the previous value of 63.
1, the highest level
in history.
Eurozone June harmonized CPI was 0.
3% month-on-month versus 0.
2% expected and 0.
3%
prior.
Eurozone June core harmonized CPI was 0.
9% year-on-year preliminary versus 0.
9% expected and 1%
prior.
Eurozone harmonized CPI in June was 1.
9% year-on-year versus 1.
9% expected and 2%
prior.

Domestically,

1.
National Bureau of Statistics: In June, China's manufacturing purchasing managers' index (PMI) was 50.
9%, down 0.
1 percentage points from the previous month, continuing to be above the critical point, and the manufacturing industry continued to expand steadily
.

2.
Caixin China's manufacturing purchasing managers' index (PMI) for June released on July 1 recorded 51.
3, down 0.
7 percentage points from May and the lowest in
three months.
Supply and demand have slowed down, employment has improved, inflationary pressure has slightly decreased, and in the future, we need to pay attention to the impact of shortages of raw materials and chips on production, export trends, and whether inflation is repeated
.

3.
National Bureau of Statistics: In May 2021, the national consumer price increased by 1.
3%
year-on-year.
Among them, urban increase by 1.
4%, rural increase of 1.
1%; Food prices rose by 0.
3% and non-food prices by 1.
6%; Consumer goods rose 1.
6 percent and services 0.
9 percent
.
1?? — On average in May, the national consumer price increased by 0.
4%
compared with the same period last year.

4.
National Bureau of Statistics: In May, the added value of industries above designated size increased by 8.
8% year-on-year, 13.
6% over the same period in 2019, and an average growth of 6.
6%
in two years.
From a month-on-month perspective, in May, the added value of industries above designated size increased by 0.
52%
over the previous month.
From January to May, the added value of industries above designated size increased by 17.
8% year-on-year, and the average growth rate for two years was 7.
0%.

Second, the market review

Shanghai copper slipped from its high this month, and then rebounded slightly into shock territory
.
Driven by the strong recovery of the US economy and the hawkish attitude of the Federal Reserve in anticipation of tightening liquidity, the US index responded to the rise to suppress copper prices, prompting Shanghai copper to fall
from the annual high range.
The domestic development and reform commission has repeatedly issued commodity price problems, the first round of dumping by the State Reserve confirmed the suppression behavior, the current Shanghai copper is still in the off-season of consumption, the lack of fundamental price momentum has brought about copper price weakness, the current medium and long-term tightening of US dollar liquidity is basically a foregone conclusion, and the Shanghai copper year is expected to have peaked
.
Under the condition that green energy copper demand and copper mine disturbance are still expected, it is expected that Shanghai copper in July will be mainly range-bound, and there will still be weak bottoming and bottoming rebound and other volatile behaviors
.

Specifically, the downward trend on June 18 and before is more obvious, mainly because the domestic development and reform commission confirmed that it will sell reserves at the end of the month, continue to strengthen the strength of price control expectations, foreign with various economic data bright eyes, the market for the Fed to tighten loose monetary policy concerns continue to heat up, specifically manifested in advance betting on the non-farm data is good or bad, the dollar index rebound and the early exit of copper long positions, copper price sentiment under internal and external resonance officially turned short
.
After Powell re-released the dovish signal, copper prices first entered a post-oversold restorative rebound in the second half of the month, and maintained volatility at the end of the month waiting for new guidance
.

From a fundamental point of view, the CSPT team determined on June 25 that the TC guidance processing fee for the third quarter was 55 US dollars / ton and 5.
5 cents / pound, which was a recovery from the first quarter, and the tight supply-side situation continued to improve.
The weekly inventory of the previous period fell by 11,000 tons, and the spot market consumption is in the off-season, it is difficult to provide a sharp rebound momentum; therefore, in view of the risk of tightening liquidity, the US dollar index is expected to continue to rebound, and under the premise of limited short-term fundamental support, the bearish expectation was maintained in the third quarter, and the main force of Shanghai copper 65,000 was expected to continue to consolidate in the first half of the year, and the support was strong, and the upstream and downstream of the operation were replenished as needed, and merchants needed to reduce daily inventory
.

In terms of the market, spot copper in East China fell by 5560 yuan in June, and the premium rose first and then fell, and the good copper remained around 150 yuan at the end of the month
.
Entering June, the downstream, especially cable companies in the early stage of raw materials willingness to stock is low, spot market transactions maintain off-season characteristics, on-demand transactions are still dominant, only on June 22 when the market stops falling and stabilizes, there is a significant increase in bargain hunting, but it is still cautious
relative to long-term inventory.
In terms of import profit and loss, the US dollar rebounded strongly, copper prices began to turn internal and external weak, although the import window is still closed, but the gap from 950 yuan / ton at the end of last month narrowed to the current close to 200 yuan / ton
.
It is expected that the window is expected to reopen
in July as the currency market fluctuates.

3.
Waste market

In June, Shanghai copper fell sharply in the first and middle of June, and began to stabilize and fluctuate in the second half of the year, and the main 2108 contract of Shanghai copper fell at 68260 yuan / ton
.
Spot copper plummeted by 5,300 yuan / ton compared with the end of May, and scrap copper fell by 4,100 yuan / ton
.
The fine waste difference fell by 1000 yuan / , and the current fine waste difference is about
1300 yuan / ton.

Affected by the hawkish remarks of the Federal Reserve this month, the expectation of interest rate hikes in advance coupled with the dual impact of the domestic policy of strong control of commodity prices, copper prices plunged, and the fundamentals were also in the consumption off-season, and copper prices rebounded weakly after the plunge
.
Recently, the hot weather coupled with the busy agricultural factor, the supply of scrap copper itself belongs to the off-season, the supply is in short supply, coupled with the small households in the market waiting for prices and selling, resulting in unusually light trading, medium and large traders are more difficult
to receive goods.

In the middle and first half of this month, the price difference of refined waste has narrowed to a very low position, the market price pressure is obvious, and the downstream copper mills and middlemen are not willing to rise
.
In addition, according to the feedback of the person in charge of the Jiangxi copper plant, most of the copper plant's external quotations this month have room for negotiation, and the market stabilized by the end of the year, and the price reduction situation improved
.
According to the different situation of manufacturers and different expectations for the future market, copper companies have adjusted prices and stopped revenue more frequently
this month.
And it is understood that because copper prices have been relatively high, but the finished product processing fee has not changed, the loss cost has increased, and the downstream profit has become thinner, we are exploring more ways
to control costs and save energy.
In terms of environmental protection, due to environmental protection supervision in the north, many copper rod and cable companies in Hebei and surrounding areas requested that production be suspended at the end of the month until July 3
.
Hebei, Henan and surrounding areas, receiving restrictions are received, but orders can still be made
.

4.
Trend forecast

The current traditional peak season may gradually pass, but some pent-up demand due to previously high prices may also be delayed, and if prices fall sharply, demand will appear
.
However, due to the current strengthening of the US dollar and the slowdown in destocking, there is also pressure above copper prices, so in this case, the probability of copper prices maintaining a volatile pattern is relatively large
.
In the future, pay attention to the off-season consumption situation, if it exceeds expectations, it may usher in a greater rebound, the current copper price maintains a volatile stage, waiting for further signals to be clear
.

5.
Industry news

1.
UBS expects global copper demand to grow by 4.
9% in 2021 and 4.
4% in 2022, while the supply of new projects is not expected to grow
significantly this year.
As a result, UBS expects refined copper supply to increase by only 1.
4% this year and 5.
1% in 2022, implying a supply gap of 603,000 tonnes in the copper market this year, equivalent to 2.
4% of annual demand; The shortfall in 2022 will reach 461,000 tonnes, equivalent to 1.
8%
of annual demand.

2.
On July 1, Zijin Mining released the 2021 half-year performance forecast: it is expected that the net profit attributable to shareholders of listed companies from January to June 2021 will be 6.
2 billion yuan to 6.
6 billion yuan, a year-on-year increase of 156.
09% to 172.
61%.

3.
According to Fitch Solutions' Country Risk and Industry Research Team (FSCRIR), global copper mine production is expected to increase by 7.
8% year-on-year in 2021 due to a large number of new projects coming online and a low base effect last year, as production fell
last year due to the coronavirus lockdown.
FSCRIR said new projects coming online this year will produce strongly
in the coming years, supported by rising copper prices and rising demand.

4.
Serbia Zijin Mining, a wholly-owned subsidiary of Zijin Mining, has obtained permission from the Serbian government to carry out mining activities
at the Cukaru Peki copper-gold mine, part of the Timok project in the east of the country.
The country's mining ministry reportedly said Serbia would become Europe's
second-largest copper producer once the mine began operations.

5.
It is reported that in 2020, 10.
7% of the copper produced globally came from Peru, in addition to 10.
8% of zinc, 11.
4% of silver and 10.
9% of molybdenum also came from Peru
.
Global copper production last year was 20.
14 million metric tons, and Peru's copper production was 2.
15 million metric tons; Global zinc production was 12.
31 million metric tons, and Peru's zinc production was 1.
33 million metric tons; Global silver production was 23,827 metric tons, and Peruvian silver production was 2,727 metric tons; Global molybdenum production was 294585 metric tons, and Peru's molybdenum production was 32,185 metric tons
.
In terms of reserves, Peruvian silver reserves continue to lead the world, accounting for 18.
1%, amounting to 91 billion metric tons; Copper reserves ranked second in the world, accounting for 10.
6%, reaching 92 billion metric tons; Fifth largest gold reserves in the world, accounting for 5.
1% or 2,700 metric tons; Zinc reserves also rank fifth in the world, accounting for 8%, reaching 20,000 metric tons
.

6.
ICSG: From January to March 2021, the cumulative production of copper mines in the world increased by 3.
7%, of which concentrate production increased by 5.
5%.

Production in Peru, the world's second-largest copper producer, increased by 3%, mainly due to an 18% increase in production in March 2021 compared to the pandemic-affected production level in March 2020, but cumulative production in January-March 2021 was still 10%
lower than the cumulative production in January-March 2019.
The Democratic Republic of the Congo, Mongolia, Panama and Russia showed strong copper mine supply growth
due to expanded copper mine demand.