Non-ferrous metals oversold rebound, copper prices short-term volatility is strong

On the macro front, expectations of a slowdown in domestic macro capital tensions began to slowly begin last week, and the marginal easing of monetary and fiscal policies will be conducive to the improvement of the economy and the recovery of demand
.
The relaxation of the details of the new asset management regulations, the shift from deleveraging to stable leverage, and the executive meeting of the State Council all indicate that the macro environment such as domestic capital will improve
.
With domestic macro pressures easing and expected to turn supportive, the market focuses on or returns to potential bullish aspects where fundamentals were overlooked under the pessimism of the previous period
.

In the copper market, based on the problems on the supply side, long funds have been withdrawn one after another, because the supply of copper mines and scrap copper has remained normal this year, and there has been no expected strike or the impact
of a decrease in the amount of imported metal.
However, at present, the labor contract negotiations in copper mines are not smooth sailing, and in the current market expectation that the negotiations have returned to the smooth progress of negotiations without the impact of strikes, once the negotiations break down, the elasticity of copper prices will be greatly increased
.
There has been no clear progress
in negotiations on labor contracts at the much-watched Escondida copper mine.
The risk of strikes at the remaining smaller copper mines has not received market attention
.

BHP has rejected the union's demands, raising the possibility
of a strike at the mine for a second consecutive year.
The end date of negotiations was postponed from June to July 24, and if no agreement is reached, the strike will begin
in mid-August.
Carlos Sandoval, a union member of the Los Pelambres copper mine, said the entrance to Chile's largest Los Pelambres open-pit copper mine owned by Antofagasta had been blocked by local protesters for more than 24 hours
。 The union at Lumina CoPPer's Caserones copper mine in Chile said Thursday that the breakdown in talks with the company would pave the way for a potential strike, which is still under way and that workers have decided to continue discussions with the company and expect government mediation to legally strike if no agreement is reached through mediation
.

Although the amount of copper scrap metal imported this year has not been greatly reduced as that of imported physical tons, the decline in scrap copper imports in the later period is a high probability event
.
And with the improvement of quality requirements, some scrap copper rods were replaced by refined copper, so that the consumption of refined copper remained high in the first half of the year
.
On June 24, 2018, the State Council issued the "Opinions of the Central Committee of the Communist Party of China and the State Council on Comprehensively Strengthening Ecological Environmental Protection and Resolutely Fighting the Battle against Pollution", which proposed to completely ban the entry of foreign garbage, severely crack down on smuggling, significantly reduce the types and quantities of solid waste imports, and strive to basically achieve zero solid waste imports
by the end of 2020.
Then it should be noted that after 2019, the import of scrap seven categories will be stopped, and whether the six categories of scrap will also be banned from imports
.

In addition, the expected smelting supply pressure will also be less than expected, in addition to the domestic smelter start-up progress is not as expected, India's Vendanta is expected to resume production within the year
.
Therefore, while supply is not tight, it is not as easy as
expected.

Overall, the bearish impact brought by the previous trade war has basically been digested, and it is still too early to impose new huge tariffs; Near the end of the month, the results of the Chilean copper mine negotiations that the market is concerned about will also be revealed, which is likely to boost copper prices; From a technical point of view, the bottom support level of copper prices is strong, and there is a rebound demand; And copper prices fell to a yearly low, which has affected supply
.
Therefore, copper prices are expected to fluctuate strongly in the short term
.