October 2020 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The final value of the Eurozone services PMI in October recorded 46.
9, the previous value was 46.
2, and the expectation was 46.
2
.
Although slightly ahead of market expectations, it is still running
below the boom-bust line.
The eurozone economic recovery stalled
last month as lockdown measures tightened.

2
.
Eurozone economic activity contracted in October as lockdowns were reimposed in the region.
The Eurozone PMI composite output index, which measures activity in manufacturing and services, fell to 49.
4 in October, a four-month low and 50.
4
in September.

3.
ADP employment in the United States increased by 365,000 in October, well below expectations of 650,000, and the previous value was revised upwards to 753,000
.
The "small non-farmer" is far worse than expected, and the road to economic recovery in the United States is still bumpy
.

4.
The US economic data in the third quarter was better than expected, and the US GDP in the third quarter increased by 33.
1% annualized rate month-on-month, recording a historic increase, but the impact of the epidemic may take longer to eliminate
.

Domestically,

1.
According to data from the National Bureau of Statistics, in October, China's manufacturing purchasing managers' index (PMI) was 51.
4%, although it was slightly lower than the previous month, but it has been above the critical point since March, indicating that the manufacturing industry has continued to pick up
overall.

2.
According to data from the National Bureau of Statistics, preliminary accounting shows that the GDP in the first three quarters was 722786 billion yuan, an increase of 0.
7%
year-on-year at comparable prices.
In the first three quarters, the economic growth rate turned from negative to positive, the relationship between supply and demand gradually improved, and the market vitality momentum increased
.

3.
China's Caixin manufacturing PMI 53.
6 in October, 52.
8 expected, 53
in the previous month.
Caixin China's manufacturing PMI rose 0.
6 percentage points in October from September, the highest value since February 2011, indicating a significant
improvement in the manufacturing boom.

4.
According to data from the National Bureau of Statistics, the industries with the most new profits are mainly automobile manufacturing industry increased by 53.
8%, non-ferrous metal smelting and rolling processing industry increased by 52.
0%, ferrous metal smelting and rolling processing industry increased by 39.
1%, general equipment manufacturing industry increased by 32.
4%, electric power, heat production and supply industry increased by 22.
4%, electrical machinery and equipment manufacturing industry increased by 16.
8%, these six industries together drove the profits of industrial enterprises above designated size in the third quarter to increase by 10.
0 percentage points year-on-year
。

Second, the market review

In October, copper prices continued to fluctuate at a high level, and the main force of Shanghai copper closed at 50940 points, a monthly increase of 0.
02%; Affected by the news of Trump's diagnosis of the new crown during the National Day, Luntong walked out of the roller coaster market, with a volatility of more than $
700 in October.
Fundamental review, in September, imported copper ore and concentrate increased by 35% year-on-year, the upstream mine end was significantly weakened by the impact of the epidemic, while Chile was frequently disrupted by strikes, which temporarily boosted copper prices, silver 10 domestic consumption did not show outstanding performance, and explicit inventories were basically stable
.

On the macro front, the news that rumors of the US stimulus bill are about to be reached this month boosted the highest London copper to $7,000, but then it was shelved, the market optimism faded, superimposed on the end of the month Europe and the United States epidemic surge again, the United States confirmed more than 80,000 in a single day, many European countries closed the city, risk aversion spread, the dollar was favored by the low rebound, copper prices fell into a pullback, the end of the month down 51,000
。 Manufacturing PMIs in various countries show to maintain expansion, while the European and American service industries will continue to be affected by the epidemic, concerns about economic recovery and uncertainty about the upcoming US election have also led to an increase in risk aversion, short-term copper prices are guided by macro guidance, the main force of 51,000 is still expected to be up for grabs, focusing on the US election, and the progress of stimulus plans to boost market confidence
.

In terms of the market, spot copper rose by 250 yuan this month, the premium fell first and then rose, and the good copper premium remained around
180 yuan at the end of the month.
A week after the National Day holiday, downstream consumption showed signs of recovery, and as the market continued to rise, the trading atmosphere decreased, and the cargo holders were forced to lower to 100 yuan of good copper premium, and the monthly floor fell, once again attracting traders and downstream bargains to enter the market
.
From the overall trading point of view, the peak consumption season of silver ten is not obvious
.
In terms of import profit and loss, the window continued to close this month, with the gap reaching a maximum of nearly 800 yuan / ton, and narrowed to around
100 yuan / ton at the end of the month.
The US dollar rebounded from a low level, the offshore RMB depreciated slightly, and the external strength of copper prices and the internal weakness weakened
significantly.

3.
Waste market

In the middle and first half of October, copper prices were mainly range-bound, and in the second half of the month, the spot copper price rose by about 200 yuan / ton compared with the end of September, and scrap copper rose slightly by 100 yuan / ton
.
Foshan area high-quality bright copper reported 47,000 yuan / ton
.
The fine waste spread has not changed much, around 1500
.

Throughout October, copper scrap prices were stable and did not fluctuate much
.
In the middle and early months, the quotations of northern and southern manufacturers expanded, and the receiving prices of traders in many places caught up with northern manufacturers, but during the second half of the year, the quotation gap between northern downstream manufacturers narrowed
due to the shortage of raw materials.
In the second half of the year, after several consecutive days of market correction, the mentality of cargo holders to cover goods eased
slightly.
The market stopped falling and stabilized, the market trading atmosphere improved slightly, and near the end of the month, the processing of left-material by manufacturers increased
.
It was learned that due to the shortage of waste, some manufacturers in Jiangxi and Henan followed the rise and fall, and the salesmen of manufacturers in Henan went out to receive goods
.
In addition, according to the feedback of large freight yards in Fujian, the removal of goods is also significantly restricted, and at the same time, scrap copper continues to rise in price, and the difference between refined waste prices narrows
.
Northern scrap copper supply is in short supply, scrap inventory is only enough to maintain production within 3 days, this month arrival orders are reduced, some copper factory procurement initiative to go out to find goods, in order to maintain stable production supply, in October most local manufacturers have a short suspension of furnaces, downstream copper rod finished product orders are still but not as good as last month, and some manufacturers have extended the account period
.

On the 19th of this month, the Ministry of Environment issued an announcement to regulate the import of recycled copper, recycled copper that meets the standards will not be a solid waste, can be freely imported, the policy will be implemented from November 1, scrap copper import standards are about to be launched, the market is worried that a large inflow of imported resources will suppress prices, cautious wait-and-see mentality heats up
.
In addition, the thirteenth batch of restricted copper scrap approvals in 2020 has been announced, and the approved import volume of copper scrap is 5,980 tons
.

4.
Trend forecast

This month, the domestic copper price fluctuated at a high level, and it showed a trend of rushing back down near the end of the month
.
Fundamentals: Overseas copper inventories continue to flow into China, although the domestic industry has recovered, but the overall pressure on copper consumption is still large, and it is difficult to form price momentum
under the peak season.
On the news, the spread of the epidemic in Europe and the United States, coupled with the imminent increase of uncertainty in the US election, Shanghai copper has further moved closer to news and technical price guidance
.
Short-term Shanghai copper may have a shock downward range formation, it is expected that next month's high support bottom shock is the mainstay, first suppress and then rise to maintain the center of
gravity of 50,000 prices.

5.
Industry news

1.
Japan's Sumitomo Metal said it is reviewing its strategic options for a minority stake in the Sierra Gorda copper mine in northern Chile, which is controlled
by the Polish Copper Group (KGHM).

2.
The senior management of the Chilean Candelaria Copper Miners Association said that the Mina union of the Candelaria copper mine in Chile could not reach a consensus with the company's management and the Chilean labor department on the terms for resuming wage negotiations, and the union decided to extend the strike time
.

3.
Zijin Mining has been approved for the issuance of convertible bonds, with a total face value of 6 billion yuan and a term of five years
.
The funds raised will be used to invest in mine projects for the Kamoa-Kakula project in the Democratic Republic of the Congo, the Timok project in Serbia and the Tongshan project
in Heilongjiang.

Chilean mining company Antofagasta said copper production fell 4.
6% month-on-month in the third quarter, and this year's production is likely to be at the low end of the initial forecast range of 725,000 to 755,000 tons, with net cash costs expected to be lower than the initial forecast of $1.
20/lb
.

5.
Mining giant BHP Billiton has shelved plans to expand its $2.
5 billion copper, gold and uranium mines at South Australia's Olympic Dam after a study of the ore body showed weaker-than-expected
expansion.
The mine produced more than 50,000 tonnes of copper in the three months ended Sept.
30, its highest quarterly production
since 2015.

6.
According to the latest report released by the World Bureau of Metal Statistics, the global copper market has a supply shortage of 447,000 tons from January to August 2020, and a supply shortage of 383,000 tons in 2019
.
From January to August, global mine copper production was 13.
54 million tons, down 0.
5%
from the same period last year.
Global refined copper production from January to August was 15.
8 million mt, up 3.
6% from a year earlier, with China adding 6.
23 million mt and Chile up 101,000 mt
.
Global demand from January to August was 16.
2 million mt, compared to 15.
5 million mt
in the same period last year.
China's apparent demand from January to August was 0.
94 million tons, an increase of 17.
5%
over the same period last year.