October 2019 cable raw materials (copper) monthly report

First, the macro aspect

Domestically,

1.
The Ministry of Industry and Information Technology said that the added value of industries above designated size in the first three quarters increased by 5.
6% year-on-year, in line with the growth rate expectations
.
In the first three quarters, the added value of industries above designated size in the country increased by 5.
6% year-on-year, maintaining the annual expected target range
.
The decline in corporate efficiency has slowed down, and the profits of industrial enterprises above designated size in the first 8 months fell by 1.
7% year-on-year, a decrease of 0.
7 percentage points
from the first half of the year.
Since the beginning of this year, in the face of the complex and changeable internal and external environment and increasing downward pressure on the economy, the operation of the industrial economy has remained in a reasonable range, and the development momentum of the information and communication industry has been stable
.

2.
China's September PPI was -1.
2% year-on-year, -1.
2% expected, and -0.
8%
in the previous month.
According to data from the National Bureau of Statistics, in September 2019, the ex-factory price of industrial producers nationwide fell by 1.
2% year-on-year and increased by 0.
1% month-on-month; Industrial producer purchase prices fell 1.
7% year-on-year and rose 0.
2%
month-on-month.
From January to September, on average, the ex-factory price of industrial producers was unchanged from the same period last year, and the purchase price of industrial producers fell by 0.
3%.

3.
According to data from the National Bureau of Statistics, preliminary accounting shows that the GDP in the first three quarters was 697798 billion yuan, an increase of 6.
2%
year-on-year at comparable prices.
In terms of quarters, the growth rate was 6.
4% in the first quarter, 6.
2% in the second quarter, and 6.
0%
in the third quarter.
By industry, the added value of the primary industry was 4.
3005 billion yuan, an increase of 2.
9%; the added value of the secondary industry was 277869 billion yuan, an increase of 5.
6%; The added value of the tertiary industry was 376925 billion yuan, an increase of 7.
0%.

The operation of the national economy is generally stable, and the economic structure has been continuously optimized
.

International aspect,

1.
Data released by the United States showed that the preliminary value of the Markit manufacturing PMI in October in the United States was actually released at 51.
50, 50.
9 expected, and the previous value was 51.
1
.
Markit chief economist pointed out that although business activity has risen from recent lows, survey data show that the annualized growth of US GDP at the beginning of the fourth quarter was just below 1.
5%, and new order growth almost stopped, remaining at the lowest level in a decade, indicating that the economic growth rate will tend to remain below trend in the coming months
.

2.
Affected by low oil prices, the final value of the Eurozone harmonized CPI in September rose by 0.
8% year-on-year, lower than the previous estimate of a three-year low (0.
9%) and also lower than 1%
of the previous value.
Analysts believe this could trigger new concerns about the state of the eurozone economy and reignite the debate
within the ECB about achieving the 2% inflation target in the medium term.

3.
The US Department of Labor released the September non-farm payrolls report, the September non-farm payrolls data was mixed, and the probability of interest rate cuts increased during the year
.
The report shows that the number of new jobs is less than expected, but better than the previous value
.
Among them, wage growth was lower than expected and the previous value, but the unemployment rate level updated the lowest level since December 1969
.

Second, the market review

Copper prices continued to fluctuate at a low level this month, with the main operating range of 4.
65-47,600.

At the beginning of the month, the trade frictions between Europe and the United States intensified, and the WTO approved the United States to impose tariffs on European exports worth about $7.
5 billion a year as soon as this month in retaliation for the illegal subsidies provided by the European Union for Airbus, and the European side threatened that the United States would counter if it was implemented, and the market atmosphere was tense
。 At the same time, the US ISM manufacturing PMI data was poor, recording the lowest level since June 09; China's official manufacturing PMI recorded 49.
8 in September, the traditional peak season index boosted limited, and the Bureau of Statistics announced that China's GDP growth rate in the first three quarters was 6%, which fell unexpectedly, and the economic growth rate continued to slow down, and copper prices were under pressure to test 46,500 support
。 In terms of Brexit, parliament voted to pass the latest version of the withdrawal agreement, but failed to leave the EU on schedule at the end of the month, the British Prime Minister plans to hold an early election, the EU agreed to extend the Brexit time by three months, the pound and the euro rebounded, and the dollar continued to fall in favor of copper; At the same time, due to the turmoil in Chile, the main producer of copper mines, the increase in the price of subway tickets caused protests in many places, and the interference at the mine end affected the supply side, copper prices were boosted and rebounded to around 47,600 in the second half of the month
.
However, the ECB president's economic remarks are pessimistic, China's manufacturing PMI in October showed another decline, below the boom and bust line for the sixth consecutive month, the economic downturn clouds shrouded the financial market, copper prices are still difficult to get out of the low shock range
.

In terms of the market, the discount of Shanghai copper rose this month was gradually reduced, and the good copper was reported as a premium of 150 yuan at the beginning of the month and adjusted to around
20 yuan at the end of the month.
Specifically, only when the futures copper fell to around 46,500 during the middle of the month, the willingness of downstream stocking was significantly improved; when the copper price rebounded at the end of the month, the downstream fear of heights basically maintained rigid demand
.
Moreover, with the customs clearance of imported copper flowing into the market, the current situation of oversupply is more prominent, the market holders and traders are once again in a tug-of-war situation, the price difference between good copper and flat water copper has also narrowed, the transaction is light, and it is difficult to boost the spot market
during the silver "ten" downstream start season.

In terms of import profit and loss, the import window closed again this month, due to the Sino-US trade negotiations reached a phase one agreement, the renminbi continued to appreciate, the progress of Brexit led to the depreciation of the US dollar, the gap has now widened to around
200 yuan / ton.
And the previously profitable imported copper was also cleared into the market
in the middle of this month.

3.
Waste market

Copper prices as a whole showed a slight rebound this month
.
The main operating range of Shanghai copper is around 46500-47500 yuan / ton, and the mainstream price of bright copper in the market is 43000-43300 yuan / ton
.
Up to now, the refined waste price difference has widened to about 1500 yuan, but it is still lower than the reasonable price difference range, which has limited advantages for scrap copper consumption, and the overall enthusiasm of the market for scrap copper demand is not high
.

Due to the recovery of copper prices, superimposed in October in the traditional consumption season, downstream consumer demand side improvement, scrap copper market activity increased, holders of profits increased began to consider shipments, the mentality of selling goods improved, the market supply tension has gradually eased, it is understood that the North China market has recently increased copper rod enterprises, Jiangxi market copper orders, some enterprises have insufficient copper finished inventory, enterprise capacity utilization rate has also rebounded, some on-demand procurement of downstream copper manufacturers actively enter the market to find goods, The price of purchased raw materials has generally resisted, and the market trading is generally acceptable
.
According to Fubao, it is learned that copper orders in some markets in Anhui have been good recently, copper scrap procurement is normal, and overall consumption is good
.

4.
Trend forecast

This month, Shanghai copper was stimulated by the favorable news to promote the upward movement many times, but the sequelae of Sino-US trade frictions gradually appeared in the social economy, and the sluggish domestic manufacturing industry hit the demand for refined copper, which was further reflected in copper prices, fearing that short-term Sino-US trade negotiations are favorable and difficult to change the medium-term situation, copper prices are prone to fall and difficult to rise, waiting for the economy to stabilize
.
It is expected that Shanghai copper will be weak in the medium term, or there may be Sino-US trade negotiations and Chilean copper mine supply re-emergence favorable, driving short-term upward
.
However, it is worth noting that the annual bottoming range has gradually formed, and it is not yet advisable to be overly bearish
.

5.
Industry news

1.
Minmetals Resources announced that several sections of the national highway between Sayhua and Velille, located in Chumbivilicas Province, Cusco Region, Peru, blocked the passage of roads entering and exiting the Las Bambas mine
.
Although copper concentrate production is not currently affected, mining operations will gradually be affected in the coming days if logistics into the mine cannot be
restored.

2.
Los Pelambres, one of the world's largest copper producers, Chile's flagship mine in Antofagasta, said management had asked the government to mediate to resolve the contract dispute
between the two sides.
After rejecting the company's offer of wage adjustments and opposing the flexible hour program, most workers voted to go ahead with the strike
.

3.
Since September 22, the access roads of the Las Bambas copper mine in MMG Peru have been blocked
.
On October 15, the Peruvian government declared a state of emergency for a portion of the road, and authorities have begun road clearance work
.
Assuming a full recovery of traffic in the coming days, copper production in 2019 is expected to be slightly below the guidance range
of 385,000 tonnes to 405,000 tonnes.

4.
Codelco has announced a plan to sell 'green copper cathode' to consumers at premium prices, using more sustainable practices such as renewable energy and recycled water to reduce its carbon emissions
.
Recently, company insiders and an executive said the project had been stranded because the mining company realized it would struggle to guarantee the "sustainability"
of its copper once it was melted down and put on the market.

5.
The recent violent clashes in Santiago, Chile, show signs of
easing.
Regarding the impact of the violent clashes on copper production in Chile, Chile's mining minister said it was too early
to assess the impact of the strikes.
At present, the Chilean National Copper Union has agreed to end the strike activities and urged the Chilean government to end the state of emergency as soon as possible, and the Chilean National Copper mines to return to normal
.

6.
Philippine mining regulators have recommended lifting the three-year moratorium on environmental permits for the Tampakan copper-gold project, although other problems facing the project will still hinder its development
.
The Tampakan copper-gold mine has the potential to become one of the largest copper mines in the world, with an estimated 15 million tonnes of copper reserves and 17.
6 million ounces
of gold reserves.