Market supply and demand are weak, copper prices are cyclically bullish expectations remain unchanged

With the Spring Festival approaching, domestic downstream enterprises have begun to take a holiday, and consumer demand has fallen again and again
.
The latest trade transaction shows that although the premium quotation of holders continues to decrease, there are few actual transactions, and the characteristics of oversupply in the market are gradually prominent
.
Recently, U.
S.
stocks plunged, followed by panic declines
in European stocks, bond markets, emerging market stocks, and bond markets.
While commodity markets have not been affected by the global sell-off sentiment in equities and bonds, the dollar index has bottomed out, and dollar-denominated commodities have seen some degree of decline
.

Although copper prices have been falling since New Year's Day, and recently hit a new low in the past two months, the recent market is still regarded as an appropriate adjustment after excessive speculation of the previous bullish factors, mainly because of the current market's general recognition
of the market bullish focus in 2018.

First, the European and American economies are improving in an all-round way, driving steady growth in future demand
.
The improvement in the economy is directly reflected in the increase in per capita income, the increase in consumption, the improvement in industry and the increase in
fixed investment.
As an importer of bulk commodities from Europe and the United States, China's export data can directly reflect the strength of the European and American economies
.
China's export data to Europe and the United States after entering the second half of 2017, it continues to hit a new high, from the data it is not difficult to see that after the debt crisis and fiscal deficit in the past few years, the European and American economies that restore a benign development system will get better and better in the future, and then drive the global economy higher
again.

Second, the expected strike has led to an increase in mine disturbance rates, and the supply of mineral copper is expected to be tight
.
According to reports from Morgan and Bank of America, there will be more than 30 mine wage negotiations in 2018, involving more than 40% of the world's production capacity and supply capacity of about 6-6.
5 million tons
.
Although it is not a centralized negotiation, it may affect the overall mine supply
throughout the year.
The market focused on the outcome
of salary negotiations at the three major mines of Escondida, Antamina and Cerro Verde.

Third, the supply of imported scrap copper is tightening a fait accompli
.
China's new solid waste regulations led to a reduction of more than 90% in the approval of a single batch of scrap copper imports in 2018, although the market expects that the pattern of low and high approval is the mainstream, but the expected large reduction in the supply of imported scrap in the future is a foregone
conclusion.
According to the annual copper scrap import volume of 3.
55 million in 2017, and the average copper content of scrap copper was 37%, and the import volume of scrap seven copper accounted for 52% of the total imported metal volume, it can be calculated that the annual copper import volume of scrap seven types of copper in 2017 was about
680,000 tons.
According to the market's general expectations, the import of scrap seven copper will be significantly reduced by more than 50% in 2018, and it is very likely to be 60%, according to the volume of 2017, there will be a gap
of 400,000 tons in the amount of copper metal in the amount of scrap seven copper metal.

Fourth, demand or steady growth
.
New energy vehicles have been hyped
in the second half of the year.
In 2017, China produced a total of 794,000 new energy vehicles, while sales were 777,000 units
.
According to the medium-term forecast, production and sales in 2018 will increase by 40% from 2017 levels, that is, production and sales will exceed the 1 million unit mark
.
According to the calculation of 80KG, the copper consumption of new energy vehicles is 4 times that of traditional energy vehicles, and the copper consumption of new energy vehicles will increase by 80,000 tons in 2018, which is relatively small and has limited
support for copper prices.

However, what needs to be paid attention to is not the incremental copper consumption of new energy vehicles themselves, but the surrounding copper consumption problem
.
In particular, the problem
of grid upgrading and pre-transformation caused by the burden on the urban power grid caused by the popularization of charging piles.
This will be an implicit incremental point
on the focus of new energy vehicles for a long time to come.

The cyclical bullish trend is unchanged

Overall, seasonal factors lead to weak supply and demand, but cyclical bullish expectations remain unchanged
.
At present, copper prices continue to early May, or the overall oscillation around the range of 51,000-54,000 yuan / ton, and the mood for resumption of work after the holiday will rise, or trigger the start of the trend market in 2018, and the whole year or around the range of 51,000-56,000 yuan / ton fluctuates
.