November 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
Concerns about the new crown epidemic have risen again, and market risk aversion has risen
rapidly.
Stocks in Europe, the United States and Asia fell due to the discovery of a new coronavirus variant in South Africa, which studies say is more contagious than Delta and has begun to spread to the rest of the world, while risk assets are high
.

2.
Fed minutes show that Fed officials discussed inflation concerns and tapering at the November meeting
.
In October, the US CPI grew 6.
2% year-on-year, the highest level
since 1990.
Inflation "breaking 6" is a signal that cannot be ignored, it has been higher than the "psychological defense line" of many people, and will adversely affect the real income of residents, consumer confidence, and the support rate of those in power, which will increase the pressure
on the Fed to withdraw from monetary easing.
The IMF said that persistently high inflation in the United States may lead to an earlier response by the Federal Reserve, which will bring systemic risks
to the global economy.

3.
The preliminary manufacturing PMI in the Eurozone in November was 58.
6, 57.
3 expected and 58.
3 in the previous month; the preliminary PMI in the services sector was 56.
6, 53.
5 expected and 54.
6 in the previous month; the preliminary composite PMI was 55.
8, 53.
2 expected and 54.
2
in the previous month.
Germany's preliminary manufacturing PMI for November was 57.
6 vs 56.
9 expected vs.
57.
8 prior, the preliminary services PMI was 53.
4 vs.
51.
5 expected vs.
52.
4 prior, and the preliminary composite PMI was 52.
8 vs 51 expected vs.
52
prior.

4.
The European economy is booming, but the epidemic situation has deteriorated again, making the US dollar strong
.
The EU Council reached an agreement with the European Parliament on the 2022 EU budget, while saying that high inflation in 2022 is only a temporary phenomenon, and released a financial stability report
.

Domestically,

1.
National Bureau of Statistics: From January to October, the total profit of industrial enterprises above designated size in the country was 7.
16499 billion yuan, a year-on-year increase of 42.
2% (calculated by comparable caliber), an increase of 43.
2% over January to October 2019, and an average growth of 19.
7%
in two years.
From January to October, the total profit of the mining industry was 863.
90 billion yuan, an increase of 1.
78 times year-on-year; the total profit of the manufacturing industry was 5.
93004 billion yuan, an increase of 39.
0%; Gross Profit of Electricity, Heat, Gas and Water Production and Supply amounted to MOP371.
05 billion, down by 19.
7%.

2.
China Macroeconomic Forum (CMF) released a report that China's macroeconomy continued to recover in 2021, but affected by base factors and the slowdown in the recovery momentum in the second half of the year, the previous high and low trend is obvious, and it is expected that the real GDP growth in the fourth quarter will be 3.
9%, the annual economic growth will be 8.
1%, and the annual growth target
will be more than 6%.

3.
China's Ministry of Commerce said that China's preparations for the implementation of the RCEP (Regional Comprehensive Economic Partnership) are now in place to ensure full compliance with its obligations, including tariff concessions and rules of origin
, when the agreement enters into force.

4.
The State Council of China held an executive meeting and decided to set up a special re-loan of RMB 200 billion to support the clean and efficient use of coal on the basis of the carbon emission reduction financial support tools established in the previous period, so as to form a policy scale and promote green and low-carbon development
.

Second, the market review

Copper prices showed a wide range of volatility in November
.
After peaking in mid-October, it stabilized at the end of October and early November, followed by overall volatility and strengthening, and finally, due to the impact of the epidemic in South Africa, there was a sharp correction
.
On November 25, South Africa detected a new variant of the new coronavirus named B.
1.
1.
529, which triggered panic in the market, and the global stock and commodity markets fell
in panic.

Macro factors, the Federal Reserve announced the November Monetary Policy Committee decision, while keeping the policy rate unchanged, officially launched the process of tapering bond purchases (Taper) to reduce the stimulus to the market
.
A large debt-laden real estate group paid interest on its bonds on time, raising expectations that the real estate industry may receive more policy support, and domestic real estate risk appetite has recovered, which has supported
copper prices.

On the supply side, the latest data from the International Copper Research Group (ICSG) showed that the global refined copper market was oversupplied by 52,000 tons in August and 39,000 tons
in July.
In the first eight months of this year, the market supply gap was 107,000 tons, compared to 97,000 tons
in the same period last year.
Global refined copper production in August was 2.
09 million mt and consumption was 2.
04 million mt
.
According to the smelter plan in November, both smelters in Guangxi have gradually recovered from maintenance, but their production has increased slowly
.
Although the power curtailment policy has been eased in most areas, the power curtailment interference in Jiangsu is still there, and the local smelter may maintain a capacity utilization rate
of 60-70%.
In addition, some smelters in Yunnan are also struggling to recover
quickly from power cuts.

On the whole, the negative impact brought by the fermentation of the epidemic in the short term will put pressure on copper prices, but in the medium and long term, economic recovery is still the main keynote, and the growth prospects of copper demand still exist, adhering to the view
that copper prices are not pessimistic in the medium term.

3.
Waste market

In the last week of the month, Shanghai copper rushed back down
.
Driven by the surge in premiums caused by low inventories at home and abroad, and the strengthening of surrounding metals, copper prices hit a new high in nearly a month, but downstream consumption was sluggish, and the epidemic aggravated to suppress market risk appetite, and copper prices showed a surge and decline
.

Due to the serious low inventory at home and abroad, spot copper premium soared sharply, hitting a decade high
.
High premium water affects downstream buying enthusiasm, electrolytic copper consumption is less than expected, orders for refined copper rods have also been greatly reduced, the advantages of recycled rods continue to expand, and the profits of recycled copper enterprises have increased, and orders have increased
compared with before.

Copper prices have climbed all the way, and the bullish sentiment of holders has increased, but downstream scrap copper enterprises are cautious in receiving goods, mainly because cable orders have not kept pace
.
Under the condition that scrap copper manufacturers have reduced prices, it is more difficult to pick up goods in centralized markets in various places
.
Shanghai copper pulled back sharply, ending a five-game winning streak, but copper prices are still at a high level
.
In some areas, especially in the north, quotations are relatively scarce, and the enthusiasm for buying goods has plummeted
.

4.
Inventory

At present, the biggest support for the copper market lies in low inventories, domestic stocks have fallen to a historical low, and the global explicit bonded zone copper stocks are only 350,000 tons
.
Low inventory is mainly due to structural shortages
caused by hidden inventory and logistics problems.
The LME has cancelled less than 20,000 tons of warehouse receipts, and the proportion of cancelled warehouse receipts has fallen to 23%, and there is not much
room for the market to continue to decline.
Low domestic inventory, import copper reduction accounted for an important factor, due to poor logistics and transportation, it is estimated that Africa and other regions have accumulated 200,000-300,000 tons of refined copper and crude copper hidden stocks, and later pay attention to the recovery of logistics after Christmas in the North American peak season
.
Once logistics begin to recover, the pressure on supply in the future market is relatively great
.

5.
Industry news

1.
According to the latest data from the International Copper Research Group (ICSG), the global copper market will be short of 42,000 metric tons this year, but there will be a surplus of 328,000 metric tons
in 2022.
With the resumption of production by overseas mining enterprises, copper production is expected to increase by 3.
9%
in 2022.
After growing 2 percent in 2020, global refined copper production is expected to grow by about 1.
7 percent in 2021 and 3.
9 percent
in 2022, ICSG said.

2.
Chile lifts the risk of
strike.
When copper prices are high, copper companies have high profits, increased production enthusiasm, and reduced the risk of
strikes.
In mid-September, factory workers at Chile's Codelco mine agreed to end the strike, while union members at BHP Billiton's mines accepted new wage proposals, easing labor tensions
in the copper-producing country.
Chile is nearing the end of an intensive contract renewal period, and the industry has so far managed to avoid shutdowns at top mines such as Escondida and El Teniente
.

3.
Copper concentrate processing fees are rising
.
In the week of October 22, China's copper concentrate index was 64.
28 US dollars / ton, up about 4 US dollars / ton
from early September.
CSPT established spot copper concentrate procurement guidance processing fees of US$70/mt and 7.
0 cents/lb for the fourth quarter of 2021, up US$15/mt and 1.
5 cents/lb
from the third quarter.
With the lifting of the risk of strike, copper mine production is expected to be further released in the fourth quarter, and processing fees are expected to accelerate upward
.
Copper mine supply is generally loose
.

4.
In October 2021, the domestic output of refined copper (electrolytic copper) was 855,000 tons, down 0.
3% year-on-year; The cumulative output from January to October was 8.
616 million tons, a cumulative increase of 8.
4%.

Domestic copper production in October 2021 was 1.
7005 million tons, down 12.
3% year-on-year in that month; The cumulative output from January to October was 16.
9615 million tons, down 5.
4%.

From January to October, copper concentrate imports increased by 6.
18%, unchanged from the previous month's data, higher than in 2020, but lower than in 2018-2019, and ore-end imports stabilized; In terms of copper and copper products, imports decreased sharply year-on-year, with a cumulative decrease of 28.
35% from January to October, maintaining a significant contraction for five consecutive months; Among them, refined copper imports fell even more, with a cumulative decrease of 28.
35%
from January to October.