October 2021 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
On October 22, the US 5-year breakeven inflation rate climbed more than 9 basis points to 3.
007%, breaking through 3% for the first time on record, far exceeding the Fed's long-term inflation target
of 2%.
The data is a measure of the US bond market's
inflation expectations over the next 5 years.

2.
The U.
S.
Treasury Department released a report showing a deficit of $2.
77 trillion in the fiscal year ending September, compared to $3.
1 trillion
in the same period last year.
In a statement, U.
S.
Treasury Secretary Janet Yellen and acting White House budget director Shalanda Young projected that the deficit will fall to $1.
15 trillion for the current budget year, beginning October 1, and will fall below $1 trillion over a three-year period from 2023 to 2025, and then rise again to more than
$1 trillion annually until 2031.
The forecast does not count two spending proposals
that remain unpassed.

3
.
Strong growth in U.
S.
business activity in October signaled a pickup in economic growth early in the fourth quarter as the pandemic receded, but labor and raw material shortages still constrained manufacturing.
Data firm IHS Markit said Thursday that the preliminary U.
S.
composite PMI rose to 57.
3 in October and 55.
0
in September.
The services PMI rose to 58.
2 from 54.
9 in September versus an estimate of 55.
1
.
The preliminary manufacturing PMI fell to 59.
2 from 60.
7 in September, the lowest in seven months, and was estimated at 60.
3
.

4.
Eurozone preliminary manufacturing PMI for October 58.
5, expected 57.
1, previous value 58.
6
.
Eurozone services PMI preliminary reading for October 54.
7 vs 55.
4 expected and 56.
4
prior.
Eurozone October composite PMI flash 54.
3 vs 55.
2 expected and 56.
2
prior.

Domestically,

1.
National Bureau of Statistics: From January to September, the total profit of industrial enterprises above designated size in the country was 6,344.
08 billion yuan, an increase of 44.
7% year-on-year, an increase of 41.
2% over January to September 2019, and an average increase of 18.
8% in two years, and the total profit of electricity, heat, gas and water production and supply industry was 344.
75 billion yuan, down 15.
2%.

2.
National Bureau of Statistics: China's CPI annual rate recorded 0.
7% in September, compared with 0.
8%
in the previous month.
Among the purchase prices of industrial producers, the price of fuel power increased by 30.
3% year-on-year, the price of ferrous metal materials increased by 23.
3% year-on-year, the price of non-ferrous metal materials and wires increased by 22.
6% year-on-year, and the price of chemical raw materials increased by 20.
7%
year-on-year.

3.
National Bureau of Statistics: In September, the added value of industries above designated size increased by 3.
1% year-on-year, 10.
2% over the same period in 2019, and an average growth of 5.
0%
in two years.
From a month-on-month perspective, in September, the added value of industries above designated size increased by 0.
05%
over the previous month.
From January to September, the added value of industries above designated size increased by 11.
8% year-on-year, and the average growth rate for two years was 6.
4%.

4.
National Bureau of Statistics: According to preliminary calculations, the GDP in the first three quarters was 823131 billion yuan, an increase of 9.
8% year-on-year at comparable prices, and an average growth of 5.
2% in two years, down 0.
1 percentage points
from the average growth rate of the first half of the two years.
The third quarter increased by 4.
9% year-on-year, and the two-year average growth was 4.
9%.

Second, the market review

In October, copper prices were mainly volatile in the early stage, and then quickly rose upward and broke through, hitting the second new high in the year and then slipping, the overall trend of rushing back down, the main force of Shanghai copper up to 76,700, London copper 10452.
5 US dollars, are close to the high level of May this year, as of the afternoon of the 29th, Shanghai copper main force reported 70540 points, a monthly increase of 3.
81% or 2590 yuan
.

At the beginning of the month, the contradiction of the energy crisis stimulated, the market speculation atmosphere is strong, domestically, the power rationing measures in Zhejiang and other places that began at the end of September led to the suspension of brass bar enterprises, the production limit was obvious, with the soaring coal futures, resulting in a surge in the cost of industrial metal smelting, with the news in Europe that due to the surge in natural gas prices and other factors, the largest zinc smelter reduced its holdings by 50%, triggered the futures market bullish position, non-ferrous metals generally hit a new high; Subsequently, guided by domestic policy intervention and guided coal prices, non-ferrous metals generally entered a correction market since October 19
.

In terms of the market, East China spot copper rose by 2690 yuan in October, and the premium fell first and then rose
.
After the National Day, the premium was gradually lowered, and after the month, affected by the tight supply of market supplies, the good copper premium once soared to around 620 yuan, and stabilized at about
450 yuan at the end of the month.
The widening of the refined waste spread, as well as the high level of futures, inhibited downstream buying from entering the market
.
In terms of import profit and loss, the October window was basically closed, of which the high overseas premium prompted the gap to reach 2300 yuan / ton on October 20, and the market rumors were actively preparing for electrolytic copper exports, and the gap returned to around
450 yuan / ton at the end of the month.

3.
Waste market

October copper prices first rose and then declined, spot copper rose by 2700 yuan / ton compared with the end of last month, scrap copper rose about 1600 yuan / ton, the difference between fine scrap expanded to around 1800 yuan, scrap copper still has an advantage
in raw materials.

This month's sharp rise and fall of the market, in the middle and early part of the year first sharply rose to hit the year's high, and then due to the state regulation and stabilization of prices, it fell sharply in the second half of the year
.
By the end of the month, the bearish sentiment in the scrap copper market was gradually rising, and the copper rebound was weak, and initial shipments increased
.
It is understood that there are many downstream manufacturers arriving at rich this month, which has an adverse impact on the price of scrap copper, and the overall transaction is
acceptable.
Compared with September, the price difference of fine waste rose, once rose to 3500 yuan / ton, and is now basically around 1800 yuan, the price advantage of scrap copper rod is obvious, and scrap copper has a certain price environment advantage
.
By the end of the month, with the completion of pre-orders, brass rods gradually entered the off-season, domestic finished products and brass prices were lowered and stabilized, and the current unified goods to the factory price has returned from a high of 45,000 yuan / ton in the month to around
42,500 yuan / ton.

At present, the bearish sentiment in the scrap copper market is gradually rising, and the copper rebound is weak and the initial shipment of goods increases, but it is reported that there are many downstream manufacturers arriving in recent days, which has an adverse impact on the price of scrap copper, and the overall transaction is
acceptable.
The policy guides commodity prices to the downside, and strengthens the overall bearish expectations
.
Spot supply and demand are weak, the basic pattern of low inventory and high premium remains unchanged, and there is still a risk of crowding, but the impact of pent-up demand continues to be reflected, and attention is paid to the release of
demand after the overall industrial product price returns.

4.
Trend forecast

This month, copper prices were mainly volatile in the early stage, and then rose rapidly to hit the second new high in the year
.
During the month, LME exchange inventories were raised by a large number of traders, and low inventories coupled with the impact of European energy crisis smelting production restrictions pushed Shanghai copper into the first round of upward pattern, but then the domestic development and reform commission issued a series of articles to suppress the speculation in the commodity market, and the black high fell back to affect Shanghai copper
.
At present, the peak season of Shanghai copper consumption will pass, the low inventory sentiment of London copper dissipates, the economic recovery pressure is difficult to support the rise in copper prices, it is expected that Shanghai copper may be weak, and return to the pre-month shock space
.

5.
Industry news

1.
In the early morning of October 20, the London Metal Exchange (LME) said that it would revise the copper loan rules and implement spot premium restrictions and deferred delivery mechanisms
.
The adjustment to the copper market is expected to be temporary and will be assessed
by the Special Committee in due course.

2.
Copper prices in 2022 will continue to fall
from record levels touched in 2021 as mineral supply increases and economic growth slows, the Reuters survey found.
The benchmark copper price surged to a record high of $10,747.
50 a tonne in May, but has since retreated about 10 percent, driven by factors including the global energy crunch, reduced factory output in China, a key demand market, and real estate market problems
.
Independent British analysts say that next year, bearish macro drivers will dominate the copper market - slower economic growth and higher
mineral supply.

According to MiningWeekly, the latest report from Fitch Solutions' country risk and industry research team predicts that global mine copper production will increase by 7.
8%
this year compared to the previous year due to a number of new projects coming on stream and a low base due to the Covid-19 epidemic in 2020.

4.
The International Copper Research Group (ICSG) released the world copper supply and demand data
for July in the October Express.
Preliminary data show that in the first seven months of 2021, world mine copper production increased by 3.
6% year-on-year, of which copper concentrate production increased by about 5.
5% year-on-year, and hydrometallurgical electrolytic copper (SX-EW) production decreased by 4.
3%
year-on-year.

5.
According to data from the International Copper Research Group (ICSG), from January to July 2021, the world's refined copper production increased by about 2.
6% year-on-year, of which the output of electrolytic copper (including electrolysis and electrowinning method) increased by 1.
8% year-on-year, and the output of recycled copper produced by scrap copper increased by 7%
year-on-year.

6.
On October 15, Zijin Mining released the third quarter report, the company achieved operating income of 169 billion yuan in the first three quarters of this year, a year-on-year increase of 30%, approaching the level of last year; The total profit was 18.
4 billion yuan, a year-on-year increase of 149%, and the net profit attributable to the parent was 11.
3 billion yuan, a year-on-year increase of 147%, and the profit level hit a record high; Operating cash flow was RMB17.
8 billion, up 80%
year-on-year.