October 2022 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The ECB announced a 75 basis point interest rate hike, in line with market expectations
.
The ECB raised the deposit rate to 1.
5%, the main refinancing rate to 2%, and the marginal lending rate to 2.
25%.

This is the ECB's third rate hike since two hikes in July and September
.
Judging from the data after the first two interest rate hikes, the ECB's effect of curbing inflation by raising interest rates is not obvious
.

2.
Eurozone consumer prices in October were 10.
7% year-on-year, 10.
3% expected, and 10.
0%
in the previous month.
Eurozone Harmonized CPI in October was 1.
5% month-on-month versus 1.
2% expected and 1.
2%
prior.
Inflation in the 19 eurozone countries surpassed September's 9.
9% in October, again hitting its highest level since 1997
.
Rising energy and food prices remain the main drivers of
higher inflation.

3.
The Fed announced a 75 basis point rate hike, raising the target range of the federal funds rate to between 3.
75% and 4.
00%, which is the sixth rate hike by the Fed this year and the fourth consecutive 75 basis point
hike.
Fed Chairman Jerome Powell said the historical record strongly warns against premature relaxation, will maintain the policy path until the work is completed, and will do everything to achieve the goal
.
It is too early
to consider a pause in rate hikes.

Domestically,

1.
According to data from the National Bureau of Statistics, from January to September, the total profit of industrial enterprises above designated size in the country was 6.
24418 billion yuan, down 2.
3%
year-on-year.
From January to September, among industrial enterprises above designated size, state-controlled enterprises achieved a total profit of 2.
09479 billion yuan, a year-on-year increase of 3.
8%; The total profit of joint-stock enterprises was 4.
55934 billion yuan, down 0.
4%; Foreign-invested enterprises and Hong Kong, Macao and Taiwan invested enterprises achieved a total profit of MOP1,481.
45 billion, down by 9.
3%; The total profit of private enterprises was 1.
70050 billion yuan, down 8.
1%.

2.
According to data from the National Bureau of Statistics, from January to September, the national real estate development investment was 103559 billion yuan, down 8.
0% year-on-year; Among them, residential investment was 7,855.
6 billion yuan, down 7.
5%.

From January to September, the housing construction area of real estate development enterprises 878919 10,000 square meters, down 5.
3%
year-on-year.
Among them, the residential construction area was 621201 million square meters, down 5.
4%.

The area of new housing starts was 947.
67 million square meters, down by 38.
0%.

Among them, the newly started residential area was 694.
83 million square meters, down 38.
7%.

The completed area of housing was 408.
79 million square meters, down 19.
9%.

Among them, the completed area of residential buildings was 295.
95 million square meters, down by 19.
6%.

3.
The National Bureau of Statistics announced that preliminary calculations show that the GDP in the first three quarters was 870269 billion yuan, an increase of 3.
0% year-on-year at constant prices, 0.
5 percentage points
faster than the first half of the year.
By industry, the added value of the primary industry was 5,477.
9 billion yuan, a year-on-year increase of 4.
2%; the added value of the secondary industry was 350189 billion yuan, an increase of 3.
9%; The added value of the tertiary industry was 4.
653 trillion yuan, an increase of 2.
3%.

In terms of quarters, GDP in the first quarter increased by 4.
8% year-on-year, 0.
4% in the second quarter and 3.
9%
in the third quarter.
On a month-on-month basis, GDP grew by 3.
9%
in the third quarter.

Second, the market review

Since October 2022, the domestic copper price fluctuations are more obvious, during the period of ups and downs, the highest rise to 65130 yuan / ton, the lowest fell to 62890 yuan / ton, overall, although the upper pressure is large, but the bottom support still exists, maintaining a wide range of shock trend
.
Represented by Yangtze River spot 1# copper, the average price of 1# copper at the beginning of the month (October 10) was 63250 yuan / ton, as of October 31, the average price of Yangtze River spot 1# copper was 63930 yuan / ton, and the price rose by 680 yuan / ton, an increase of 1.
08%.

In terms of the market, the effect of the silver "ten" consumption season has not been shown, the contraction of real estate and downstream markets has limited the trading atmosphere, and domestic infrastructure has brought some increments
.
Relatively weak orders and continued high premiums have led to a sluggish willingness to reserve downstream stockpiles, dominated by on-demand buying; The low inventory and tight supply have prompted the strong willingness of holders to raise prices, limiting the trading atmosphere
.
In terms of import profit and loss, due to the high domestic premium and the squeeze effect of the month, the import profit window expanded this month, exceeding 1,000 yuan per ton, maintained until around the 20th, and reclosed
at the end of the month.

On the macro front, the Fed's November interest rate hike meeting ended on the 3rd, as the market expected a 75bp interest rate hike, and the market atmosphere was better
.
But then the Fed chairman reiterated his hawkish stance, and the market was once again volatile, cashing in
bearishly.
And there is no clear signal on slowing down the rate hike, macro pressure remains, and metals continue to come under pressure
.
However, the domestic macro is better, the national stable growth policy is still increasing, giving the market greater confidence, coupled with the high growth rate of infrastructure investment and the beautiful performance of new energy, greatly driving copper demand, but the real estate problem still has great trouble, but also the source of weak market sentiment
.
Coupled with the continued impact of the epidemic on the economy, market sentiment has been dampened
.
Under the strong reality, the fundamentals are still supported, global copper inventories are still at a low level to continue to support copper prices, spot deliverable sources are still tight, and it is expected that short-term copper prices may continue to fluctuate and repair
.

3.
Waste market

Spot copper rose by about 1960 yuan / ton in October compared with the previous month, and scrap copper rose by about
1400 yuan / ton.
The difference in refined scrap is around 1730 yuan, up 360 yuan from last month, and the copper scrap has obvious advantages
.

Copper scrap rose in October
.
At the beginning of the month, the market rose, the market quotation was positive, the copper price was raised many times, traders were afraid of the decline in the later market, which would bring losses, and more high shipments, falling bags for safety, until the flow of goods increased, and the market trading atmosphere warmed up
.
Due to the continuation of the epidemic in some areas, the copper factory has been hindered in delivery, the purchase volume of raw materials has declined, and the goods
have been received at a slightly higher price.
In addition, due to price factors, the current source of copper in Suzhou flows into Wuhu, Anhui, and Hubei is more
.
Recently, the price difference of refined waste has widened to nearly 1800 yuan, the effect of copper scrap replacing refined copper has increased, and the inventory of copper mills has decreased, and copper mills are willing to raise prices
.

With interest rate hikes approaching at the end of the month, and more shipments in previous days and fewer supplies, traders are selling their goods
.
The market is mediocre
.

4.
Inventory

From the perspective of inventory changes, inventories continued to degrade, while spot premiums remained high, giving strong support to prices
.
In mid-October, domestic exchange inventories accumulated significantly, but with the end of monthly delivery, continuous destocking began, and the current global inventory is still at a low level
.
The data shows that domestic stocks continue to remain at the level of 70,000 tons, COMEX stocks are slightly degraded, and LME stocks are more significant
.

Recently, LME copper inventories continue to decline, and the cancellation of warehouse receipts continues to increase, suggesting that inventories will continue to flow out, if the LME goes out too much, it may lead to a phased squeeze on the external disk, and the squeeze pressure supports copper prices
.

If the LME chooses to ban the use of Russian metals immediately, it is bound to cause greater volatility in the short term against the background of already low inventories; If you choose to continue trading or set an inventory threshold for a period of time, it will have less
impact on the short-term market.

5.
Industry news

1.
Trafigura warned that global copper stocks have fallen to dangerously low levels
.
Speaking at the Financial Times Mining Summit, Kostas Bintas, co-head of Trafigura's metals and minerals exchange, said stocks in the copper market could currently meet global consumption for 4.
9 days, and according to Trafigura's forecast, it is expected to fall to 2.
7 days
this year.
Copper stocks are usually calculated
on a weekly basis.
Copper prices are now around $7,400/mt, down about 30%
from a record high of $10,000/mt in early March.
Limited inventories increase the risk of sudden price spikes, and traders scramble to secure supply
if prices fall sharply.
While a strong dollar and fears of a global recession have weighed on copper prices in recent months, executives in the global metals industry said limited supply still supported copper prices
.

2.
Foreign news on October 26, the Chilean government revised a mining royalty proposal that has attracted criticism from mining companies, canceled the assessment of higher tax rates for large miners, linked payments to copper prices, and imposed a 1% ad valorem tax
on large producers.
The original bill, introduced in July, was criticized
by global mining companies BHP and Antofagasta.
They say this will affect the competitiveness and investment
of Chile, the world's largest copper producer.
The revised proposals, announced by the finance ministry and mines ministers, would impose a flat ad valorem tax of 1 percent on large copper miners with more than 50,000 tonnes per annum
.

3.
Foreign news on October 27, according to people familiar with the matter, the US mining giant Freeport-McMoRan is negotiating to acquire an Arizona copper smelter from a Mexican group, which is seeking to improve its domestic smelting capacity
.
Freeport-McMoRan executives recently visited the Hayden smelter to assess the project's operations
, people familiar with the matter said.
The Hayden smelter is owned
by Asarco, a Mexican group.
Both the Mexican group and Freeport declined to comment
.

4.
Southern Copper Company's sales in the third quarter were 2.
16 billion US dollars, analysts expected 2.
26 billion US dollars; the adjusted EBITDA in the third quarter was 1.
02 billion US dollars, analysts expected 966.
6 million US dollars; the net profit in the third quarter was 519 million US dollars, and analysts expected 407.
8 million US dollars
.

5.
According to the CEO of the National Copper Company of Iran (NICICO), in the first six months of 1401 AH (March 21 to September 17), the company produced about 600,000 tons of copper concentrate, an increase of 7% year-on-year, and sales of about $1.
32 billion, an increase of 19%
year-on-year.
NICICO is a copper mine that mines and owns nearly 14% of Asia's copper deposits and about 3% of the world's copper reserves
.