March 2022 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The ECB sharply raised its inflation forecast for 2022, expecting inflation expectations for 2022 to be 5.
1%, compared with 3.
2% previously; At the same time, the GDP growth forecast for 2022 was lowered, and the GDP growth forecast for 2022 is expected to be 3.
7%, compared with the previous forecast of 4.
2%.

2.
The US CPI rose 7.
9% year-on-year in February, continuing to hit a 40-year high
.
It is worth noting that the report is the last major economic data before the Fed's March decision, and it measures the economic situation before the escalation of the Russia-Ukraine conflict, and US inflation is probably far from peaking
.

3.
Russian President Vladimir Putin signed a decree on the settlement of natural gas trade in rubles, which came into effect
on April 1.
Putin said that if buyers of "unfriendly countries (and regions)" do not fulfill the new payment conditions, Russia will suspend existing gas supply contracts
.

Domestically,

In January and March, the domestic non-manufacturing business activity index was 48.
4%, down 3.
2 percentage points from the previous month, and the non-manufacturing boom fell to the contraction range
.
By industry, the business activity index of the construction industry was 58.
1%, up 0.
5 percentage points
from the previous month.
The index of business activity in the service sector was 46.
7%, down 3.
8 percentage points
from the previous month.

2.
The Monetary Policy Committee of the People's Bank of China pointed out at its regular meeting in the first quarter of 2022 that it is necessary to increase the implementation of prudent monetary policy, enhance forward-looking, precise and autonomous, take the initiative to respond, boost confidence, provide stronger support for the real economy, and stabilize the macroeconomic market
.

3.
China's manufacturing purchasing managers' index (PMI) in March 2022 was 49.
5%, down 0.
7 percentage points
from the previous month.
The composite PMI output index in March 2022 was 48.
8%, down 2.
4 percentage points
from the previous month.

Second, the market review

In March, copper prices fluctuated to the upside, affected by the tension between Russia and Ukraine, London copper updated a new record high, with a monthly increase of 5.
15% or $507.
5, and the main force of Shanghai copper closed at 73320 points, a monthly increase of 3.
28% or 2330 yuan
.

At the beginning of the month, geopolitical risks are pervasive, Ukraine intends to join NATO, European and American sanctions increase, involving crude oil and other commodities, stimulating oil prices to climb one after another, U.
S.
crude oil recorded a maximum of $130.
5 on March 7, a new high since 2008, supply concerns superimposed on the expectation of rapidly rising inflation boosted the collective surge of non-ferrous metals, nickel prices rose three times in a row, copper prices hit a record high, March 8 experienced a roller coaster market, daily volatility of nearly 6,000 yuan
.
The follow-up market gradually reviewed the fundamental guidance, due to the persistence of inflation, the overall trend is high and difficult to fall
.

In terms of the market, the seasonal destocking in the last period of this year is relatively advanced, the explicit inventory began to decline at a lower position, the overall supply is tight, and the epidemic situation in Shanghai is serious, transportation difficulties, downstream demand side is also under pressure, supply and demand have no obvious support effect on the plate, and the holiday model around Shanghai is forced to advance
at the end of the month.
In terms of import profit and loss, the Fed's hawkish interest rate hike landed, the dollar strengthened, and the import profit window continued to close this month, and the gap widened slightly to around
700 yuan / ton.

In the short term, the repeated domestic epidemic has affected logistics and consumer demand in some regions, and has interfered
with copper prices.
However, the expectation of strong domestic policies still exists, power grid, infrastructure and new energy-related sectors continue to make efforts, coupled with the continuous decline of domestic and foreign copper inventories, the downstream of domestic non-epidemic areas began to stock up in the peak season, the inflection point of inventory has appeared, and the expectation of consumption recovery has heated up, boosting market confidence and supporting copper prices to maintain a strong trend
.
In the short term, it is also necessary to pay attention to the interference of the situation in Russia and Ukraine, overseas inflation and economic data, if there is a situation that exceeds market expectations, the commodity market will fluctuate sharply, and the trend of copper prices may fluctuate
sharply.

3.
Waste market

This month's spot copper rose by about 3,000 yuan / ton compared with the end of last month, scrap copper rose by about 2,300 yuan / ton, and the difference between refined scrap and scrap at the end of the month was around 2,300 yuan, and the copper scrap advantage was obvious
.

At the beginning of the month, the scrap copper market rose and fell sharply, the price fluctuated greatly, the holders covered the goods and maintained a strong price attitude, and the market trading atmosphere gradually declined; It is also tracked that due to the impact of the new fiscal and taxation policies, most holders actively sold goods at the end of February, resulting in low supply inventory in the current market and obvious market rush.

In the middle of the month, Shanghai copper bottomed out, and prices rose, especially on March 18, which rose as much as 700 yuan / ton
.
The follow-up market continued to rise, and the shipment of cargo holders increased
.
However, due to the impact of the epidemic, many places had to temporarily suspend work, and the market highlighted the priceless market, especially Quanzhou Nan'an, Suzhou, Anhui Hefei, Shanghai and other places
.
Among them, the copper factory quotation is the highest in Hunan, mainly to complete the order, so the quotation on March 22 only stopped in five minutes, and the subsequent price returned to the market
.
With the tightening of Jiangxi's subsidy policy, the cost of copper factory ticket points has moved up, and the competitive advantage has declined
.

4.
Inventory

Domestically, the inventory accumulation period has ended, has begun to dematerialize ahead of schedule, and is expected to soon fall to a historically low level again, supporting copper prices
.
Exchange inventories were the first to peak and decline, and the dematerialization rate was slightly faster than expected, while bonded port inventories also began to fall
recently.
As of March 25, the latest inventory of domestic exchanges was 102055 tons, compared with 129506 tons last week, down 27,451 tons
from the previous week.
As of March 25, the national inventory (including bonded areas) was 451,400 tons, down 52,500 tons from the previous week, of which the bonded zone fell by 28,800 tons, and the non-bonded zone fell by 23,700 tons, and the total inventory was 248,500 tons lower than the same period last year, the lowest value
in the same period in nearly six years.

Overseas, LME inventories remain low, and although there has been a slight recovery recently, they remain low
overall.
As of March 26, the latest inventory of LME London copper reported 80,550 tons, down 50 tons, or 0.
06%,
from the previous trading day.
The decline in overseas inventories may be due to the reduction of Russian copper supplies due to increased Western sanctions, and the overhaul period of European copper smelters under soaring energy prices
.
On the whole, the global inventory level is still low, and has ushered in the seasonal destocking stage, to a certain extent to give copper price support, short-term prices are still likely to
strengthen.

5.
Industry news

1.
According to foreign media, Fitch Ratings raised its metal and ore price forecasts, reflecting increased demand after the pandemic, tight market supply and short-term supply disruptions, especially because of the conflict
between Russia and Ukraine.
Some commodities are also benefiting from increased
long-term demand for their role in global decarbonization.
Because of its use in electrification, copper is the only commodity Fitch has raised its long-term price estimates
.

2.
The London Metal Exchange (LME) said that from the close of trading on March 31, the initial margin per ton of copper trading will be raised from $638 to $650, and the initial margin per ton of aluminum trading will be raised from $262 to $280
.

3.
According to Mysteel, CSPT held an online meeting on March 30 to finalize the guidance price of copper concentrate spot TC of $80/dry ton
in the second quarter of 2022.
The CSPT spot TC guidance price for the first quarter of 2022 is $70/dry tonne
.
In March 2022, the rolling monthly average price of Mysteel Clean Copper Concentrate Composite TC was $70.
3/dry tonne
.

4.
According to data from the International Copper Research Group (ICSG), the world's refined copper production from January to December 2021 increased by about 1.
4% year-on-year, of which the output of electrolytic copper (including electrolysis and electrowinning method) increased by 0.
6% year-on-year, and the output of recycled copper produced by scrap copper increased by 6%
year-on-year.

5.
Preliminary official data released by China shows that China's refined copper production in 2021 increased by 4.
5% year-on-year, mainly because production in the first half of the year increased by 8%
from a low base in the same period last year.
In the first half of 2020, China's copper production was affected
by the epidemic and prevention and control measures.

6.
Data show that in Africa, refined copper production in the Democratic Republic of the Congo increased by 8% year-on-year, as new copper mines were put into operation or hydrosmelting plants were expanded
.
Production in India increased by 47%, Belgium by 20% and US production by 10%, mainly due to smelter recovery
from operational issues in 2020 and lockdowns.