May 2022 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The Fed's FOMC statement shows that it began to shrink its balance sheet at a pace of $47.
5 billion per month on June 1; Gradually raise the balance sheet reduction ceiling to $95 billion per month over three months, or $60 billion in U.
S.
Treasuries and $35 billion in mortgage-backed securities (MBS)
per month.
It is expected that it is appropriate to "continue" to raise interest rates, "highly regarding" inflation risks; Increase the excess reserve ratio from 0.
4% to 0.
9%; Increase the overnight repo rate from 0.
5% to 1%.

The Institute of International Finance (IIF) lowered its global GDP growth forecast for 2022 to 2.
3% from 4.
6%, and the G3 (US, Eurozone, and Japan) grew by 1.
9% this year, citing the economic impact
of the Russia-Ukraine conflict and tighter monetary policy in the United States.

3.
The forecast released by the US Congressional Budget Office on the 25th shows that in the fiscal year 2023, which begins on October 1, the budget deficit will also narrow to $984 billion
.
The deficit for this fiscal year and next is significantly lower than the $2.
8 trillion
in fiscal 2021.
Total federal debt is expected to increase by $1.
9 trillion
in fiscal year 2022.
At the same time, it is predicted that by the end of 2022, the Fed will only raise the benchmark interest rate to 1.
9% (market expectations were 2.
6%) and by the end of 2023 to 2.
6%.

Domestically,

1.
China's official manufacturing PMI in May was 49.
6, the previous value was 47.
4
.
China's official non-manufacturing PMI for May was 47.
8 vs 41.
9
previously.
Caixin China's manufacturing purchasing managers' index (PMI) recorded 48.
1, up 2.
1 percentage points
from the previous month.

2
.
The executive meeting of the State Council has deployed a package of policies and measures to accelerate the implementation of the package of policies and measures to stabilize the economy, so that market entities and the people should know everything and enjoy it to the fullest.
The meeting pointed out that in accordance with the overall ideas and policy orientation of the Central Economic Work Conference and the Government Work Report, a package of policy measures to stabilize the economy was introduced, mainly to speed up the implementation of policies and increase efficiency
.
This is not only an important measure to increase efforts to stabilize the overall economic market in a timely manner, but also insist on implementing macro policies around market entities, implement precise regulation and control, improve efficiency, and not overdraft the future
.
Implementing the arrangements of the Party Central Committee and the State Council, all departments acted quickly, and positive progress
was made in the formulation and promulgation of 33 implementation rules for policies and measures in 6 aspects.

3.
The People's Bank of China kept the one-year loan market quotation rate (LPR) unchanged at 3.
70%; Cut the five-year loan market quotation rate (LPR) from 4.
60% to 4.
45%.

Second, the market review

In May, copper prices rebounded after bottoming out, but still did not close the previous decline, showing a weak rebound pattern
overall.
During the month, the main force of Shanghai copper first fell and then rose, once down to the 70,000 mark, and then rebounded after the US dollar index retreated from the 105 high and entered the shock structure
.

On the macro front, at the beginning of the month, the Fed raised the target range of the federal funds rate at its May interest rate meeting and announced that it would shrink its balance sheet at a rate of $47.
5 billion per month starting in June, and the dollar broke through the previous high volatility range, reaching a maximum of 105.
01 points
.
Combined with fears caused by the expectation of a global economic downturn, copper prices moved sharply lower
.
Subsequently, due to the worrying state of the US domestic economy, the hawkish voice of the Fed was suspended; At the same time, the eurozone is burdened with inflation, and the European Central Bank signals to raise interest rates
.
The dollar quickly turned downwards
.
Combined with the recent introduction of intensive favorable policies in China and the high demand expectations brought about by the accelerated pace of resumption of work and production, copper prices have picked up and returned to the 72,000 vicinity
.
The market generally expects the Fed to raise interest rates by 50 BP in June, and the dollar index is unlikely to break through again
.

In terms of the market, the epidemic lockdown in Shanghai affected some electrocopper trading, but the subsequent bulk logistics and transportation were dredged, and the electro-copper trade process
within the month.
At present, the domestic economic stabilization policy has been implemented one after another, and the superimposed fine waste gap has narrowed, and the refined copper premium may
continue to rise.
In terms of import profit and loss, affected by the wave of interest rate hikes by overseas central banks, the change of the US dollar index has caused large fluctuations in RMB prices, with an average monthly import profit of 267 yuan / ton, and the import window is open most of the time
.

On the consumer side, domestic logistics and transportation still have an impact, and the downstream operating rate has rebounded, and generally bargain procurement is the mainstay
.
Demand for major terminal real estate, building materials, automobiles, etc.
remained weak
compared with previous years.
It is expected that as the epidemic eases, China will usher in a period of resumption of production and rush construction, and demand is expected to usher in an outbreak, especially in engineering such as real estate and infrastructure and manufacturing such as
automobiles.
Domestic spot is tight to maintain destocking, and the low level of global explicit inventory is still supported
.

In general, the overseas macro atmosphere bottomed out in stages, the US dollar index fell back and the domestic stable growth policy landed to support prices
.
With the gradual control of the domestic epidemic and the resumption of work and production to stimulate consumption, low inventories support copper prices are expected to rebound
in June.

3.
Waste market

In early May, the market fell sharply, causing panic and dumping psychology among holders, superimposed on the relatively high price of scrap copper, the trading volume of the Linyi market increased significantly, and resources flowed to Jiangxi and other places
.
After falling for several days, the trading atmosphere of the regeneration market declined
.

In the middle of the month, the market pullback, the scrap copper market warmed up, Baoding, Linyi and other places traders recently waited for copper mills to bid and order, the next day in the market to buy, if necessary, a small price to receive
.
Coupled with the recent rise in gas prices, the production costs of some copper plants in Hubei have moved up, and profits have declined
.
At the end of the month, the market rose, the trading atmosphere of the scrap copper market heated up, traders moved goods actively, and the trading volume was amplified, but the copper mill received the goods conservatively, and immediately lowered the purchase after preparing goods on demand, and the refined waste price spread gradually returned
.
Traders are afraid of falling sentiment, short orders are prevalent, and downstream copper rod consumption has not kept up, so manufacturers maintain low prices, No.
31 market rose slightly, holders covered the goods and sold them, and the transaction was not good
.
In addition, traders pay more attention to some copper mills in Hunan, Hubei and Jiangxi with high quotations
.

Recently, the epidemic situation in some areas has been effectively controlled, and traders can
deliver nucleic acid within 48 hours.
The liquidity of the supply is expanded, and the market can be traded
normally.

4.
Inventory

London copper stocks initially entered an upward channel since March, rising to a seven-month high of 180,925 tonnes more than two months later, and then declining stock levels, with LME copper stocks reaching 155,000 tonnes as of May 30, down 01,400 tonnes
from the beginning of the month.

Copper stocks in the previous period decreased by 06,800 tons from the previous month to 42,000 tons
.
The global explicit inventory remained low, the proportion of LME copper warehouse receipts rebounded rapidly, and the willingness of copper warehouse receipts to go out was strong
.
Domestic spot premiums are high, and inventories are in a very low position
compared with previous years.
Copper stocks on the New York Exchange were 80,050 tons, down 3,964 tons
from the beginning of the month.
Inventory in the bonded zone has fallen slightly, and it is difficult to open the import window quickly
.

5.
Industry news

1.
According to WBMS, the global copper market has a supply shortage of 189,000 tons from January to March, and a supply shortage of 473,000 tons in 2021
.
Global refined copper production from January to March was 6 million tons, an increase of 0.
6%
year-on-year.
In March, global refined copper production was 2.
0239 million tons, and demand was 2.
1444 million tons
.

2.
According to the National Bureau of Statistics, China's refined copper production in April was 898,000 tons, down 1% year-on-year and down 4%
month-on-month.
In April, some copper smelters entered the maintenance stage, and the output declined, and in May this year, domestic smelters Daye, Zijin, Chifeng Yuncopper, etc.
entered the maintenance period, and the refined copper output this month is likely to continue to decline
.
However, the old Fangyuan line has resumed production, and it is expected that Xiangguang will be put into production on May 21, the sea will also resume production, and the electrolytic copper production will be repaired
in June.

3.
According to ICSG, in the first quarter of 2022, world mine copper production increased by 2.
6% year-on-year, of which copper concentrate production increased by about 2.
2% year-on-year, and hydrometallurgical electrolytic copper production increased by 4.
7%
year-on-year.
Global production growth was driven by additional production from new or increased copper mine production, as well as a lower base effect
in the first quarter of 2021.

4.
The only operating copper mine in Botswana suspended production due to the accident, and Peru extended the state of emergency of the Las Bambas copper mine for 60 days, which has been suspended for more than a month
.
Freeport Indonesia plans to increase copper concentrate production by 6.
7% in 2022 with frequent mine
disturbances.

5.
In 2022, the processing fee showed an upward trend of gravity, and the TC price fell slightly in May but remained high
.
CSPT online meeting finalized the copper concentrate spot TC guidance price of US$80/dry tonne
for the second quarter of 2022.

In June and April, the import volume of unwrought copper and copper products was 465,000 tons, down 4.
03% year-on-year and up 0.
9%
year-on-year.
April refined copper imports were 289,507.
45 tons, down 10.
5% month-on-month and 9.
27%
year-on-year.