May 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The preliminary Markit manufacturing PMI in the United States in May was 61.
5, the previous value was 60.
5, and the expectation was 60.
2
.
Eurozone preliminary manufacturing PMI for May was 62.
8 vs 62.
9 prior, 62.
5
expected.
Germany's PPI surged further in April, rising at the fastest pace since surveys began in 1996
.

2.
Eurozone GDP in the first quarter annualized revised value was -1.
8%, -1.
8% in the previous month, and -1.
8% in the forecast; Decreased 0.
6%
sequentially.
Year-on-year growth has been negative for two consecutive quarters, indicating that the eurozone is officially in recession
again.

3.
The US CPI rose 4.
2% year-on-year in April, refreshing a ten-year high, expected to be 3.
6%, and the previous value was 2.
6%; Among them, the core CPI rose 3% year-on-year, 2.
3% expected, and 1.
6%
in the previous month.
US inflation has exceeded expectations, and US money markets believe that the probability of a 25 basis point rate hike by the Fed in December 2022 has risen from 88% to 100%.

4.
The latest data released by the US Department of Labor shows that in the week of May 15, the number of initial jobless claims in the United States fell to 444,000, a new low
since the outbreak of the epidemic.
The U.
S.
job market has steadily improved
as pandemic restrictions have been lifted.

Domestically,

1.
China's official manufacturing PMI recorded 51 in May, vs 51.
1
in the previous month.
Zhao Qinghe, senior statistician of the Service Industry Survey Center of the National Bureau of Statistics: The price index is the highest in
recent years.
The purchase price index and factory price index of major raw materials were 72.
8% and 60.
6% respectively, higher than the previous month's 5.
9 and 3.
3 percentage points
.

2.
According to data from the National Bureau of Statistics, in April, the added value of industries above designated size in the country increased by 9.
8% year-on-year, affected by the acceleration of the resumption of work and production in the same period last year and the increase in the base, the growth rate fell by 4.
3 percentage points
compared with March.
Industrial production continued to recover steadily since last year, and the growth of industrial exports accelerated
.

3.
According to data from the National Bureau of Statistics, from January to April 2021, the national fixed asset investment (excluding rural households) continued to recover steadily, with a year-on-year increase of 19.
9%; Taking January to April 2019 as the base period, the two-year average growth rate was 3.
9%, an increase of 1.
0 percentage points over the first quarter, and a month-on-month increase of 1.
49%
in April.

4.
According to data from the National Bureau of Statistics, in April 2021, the national consumer price increased by 0.
9% year-on-year, an increase of 0.
5 percentage points
over the previous month.
From a month-on-month perspective, the CPI fell by 0.
3%, a decrease of 0.
2 percentage points
from the previous month.
In April, domestic consumer demand continued to recover, and prices were generally stable
.

Second, the market review

This month, Shanghai copper first rose and then declined, hitting new highs in recent years
.
In the first half of the month, copper prices rose first and then fell, and at the end of the month, the range was sorted out, and Shanghai copper rose 2.
87%
in the month.
Intraday London copper hit a record high of $10,747.
5, and the main force of Shanghai copper reached 78,270 yuan, a new high
since 2006.
As of 3 pm on June 4, the main 2107 contract of Shanghai copper closed at 70910 points
.
In early May, guided by economic recovery and imported inflation, market risk appetite heated up, and non-ferrous metals led by copper generally strengthened; Then, with the repeated emphasis on commodity price preservation and price stabilization, price control worries coupled with weak domestic consumption led to a correction
in the market.
And in early June, copper prices weakened again due to concerns about tightening the
Fed's monetary policy.

From a macro perspective, with the US inflation data CPI, PPI data high, and employment data signs of recovery, the Fed tapering QE brought about policy tightening expectations strengthened, the market generally paid attention to the evening non-farm payrolls data to confirm, such as a sharp exceed expectations will have a significant boost to the dollar index, bearish commodities, because the current copper price is at the bottom of the recent shock range, below the support level can be seen below the space to 70,000 or even lower; Conversely, copper prices will enter the oversold rebound repair again, but the overall upper space will also narrow.

In terms of the market, spot copper rose by 1960 yuan in May, the premium first rose and then fell, and the good copper at the end of the month remained around
20 yuan.
At the beginning of the month, the market continued to rise, and downstream buyers stopped and waited for the mood
.
Affected by the continuous rise in raw materials, it is difficult for small and medium-sized enterprises to make up for the loss of processing fees, especially on the 19th, the buying order is particularly light, the spot copper premium is difficult to hold steady, and the decline in the futures has promoted the further downward trend of the plate
.
As prices fell, downstream consumption picked up at the end of the month, and the willingness to buy around 71,000 was high, and the inventory in the previous period entered a downward trend
.
In terms of import profit and loss, the US dollar bottomed out, the domestic foreign exchange deposit reserve ratio was raised, the RMB exchange rate soared and fell, copper prices were strong outside and weak inside, although the import window was still closed, but the gap narrowed from 950 yuan / ton at the end of last month to nearly 500 yuan / ton now
.

3.
Waste market

In May, copper prices first rose and then declined, hitting a nearly 10-year high on May 10, and then began to fall
.
Spot copper rose by 2,000 yuan / ton compared with the end of last month, scrap copper rose by about 2,400 yuan / ton, and scrap copper rose more than electrolytic copper
.
At the end of the month, the fine waste difference fell from 3900 yuan / ton at the end of April to 3300 yuan / ton, reducing the price
difference by 600 yuan.
The price advantage of copper scrap is still obvious
.

At the end of the May Day holiday of the first month of the month, copper prices soared, inflation and demand side strongly supported copper prices, to the 10th, Shanghai copper rushed to a decade high of 78,000 yuan / ton, scrap copper prices rose sharply, more than 70,000 yuan / ton
.
The State Council has repeatedly named commodities to curb the unreasonable rise in commodity prices, causing copper prices to plummet continuously, causing market panic
.
Due to the continuous collapse, the fear of decline has intensified, and due to factors such as capital flow, they sold goods at a low price
.
Until the 28th, Biden proposed a plan to boost infrastructure, and copper prices began to rebound and stabilize
.

It is understood that market traders often owe short orders during the month
.
The arrival volume of downstream copper enterprises has a large gap between the north and the south, and most of the southern manufacturers have queued up to unload
.
And the recent copper rod orders are not good, in addition to Jiangxi, the price gap of regional manufacturers has narrowed, such as Hubei and Jiangsu have been close
.
Many manufacturers have reported that some large copper rod trading enterprises have sold lower prices than manufacturers through the combination of cash and cash, so as to achieve multi-party profits
.
By the end of May, due to national price regulation, terminal small and medium-sized enterprises began to actively produce the backlog of downstream orders
from April to mid-May.
Since June, affected by the Fed's tapering of QE concerns and the rebound of the US dollar, copper prices have plummeted, and the market price in the morning is more disordered, and traders bright copper has roughly remained between 6.
3-64,000, but the mentality of holders is heavy, and it is more common to have no market
.

4.
Trend forecast

With the US inflation data CPI, PPI data high, and employment data signs of recovery, the Fed tapering QE brought about policy tightening expectations strengthened, the market generally pays attention to the non-farm payrolls data to confirm, such as a sharp exceed expectations will have a significant boost to the US dollar index, bearish commodities, because the current copper price is at the bottom of the recent shock range, below the support level can be seen below the space to 70,000 or even lower; Conversely, copper prices will enter the oversold rebound repair again, but the overall upper space will also narrow.

5.
Industry news

1.
Glencore plans to restart the Mutanda copper-cobalt project
in the Democratic Republic of Congo next year.
Mutanda, the world's largest cobalt mine that also produces large amounts of copper, suspended operations in August 2019 to 199,000 tonnes of copper and 27,300 tonnes of cobalt
hydroxide respectively in 2018.

2.
The union representing miners' interests at Chile's Escondida copper mine said it would be ready for a lengthy strike
if management did not change its past "bad" attitude toward its workforce and reached a "fair and reasonable" agreement in upcoming contract negotiations.

Codelco, Chile's national copper company, the world's largest copper producer, announced it will soon break ground on a $1.
4 billion project to extend the life of its aging Salvador mine until 2068
.
The Rajo Inca project aims to convert Salvador from an underground mine to an open-pit mine
, the statement said.

4.
BHP said in a statement that union workers at Chile's Escondida and Spence copper mines will hold a strike vote
after contract negotiations stalled.
If workers vote for strikes at Escondida and Spence, the world's largest copper mines, Chilean labor law requires both sides to accept government-led mediation
for 5 to 10 days.

5.
On May 26, Zijin Mining announced that the first series of 3.
8 million tons of ore processing system of the first phase of the Kamoa-Kakula copper mine under the company located in the Democratic Republic of the Congo (Kinshasa) recently began to be put into operation, and officially started copper concentrate production on May 25, Beijing time, achieving the goal
of completing and putting the project into operation ahead of schedule.

Goldman Sachs said in a report that a proposal by Chile to raise royalties for the country's mining companies, if unchanged, could put the country's annual copper production of about 1 million tons, or about 4%
of the global copper supply, at risk.
Chile is the world's
largest producer of copper.