September 2019 cable raw materials (copper) monthly report

First, the macro aspect

Domestically,

1.
In September 2019, China's manufacturing purchasing managers' index (PMI) was 49.
8%, up 0.
3 percentage points from the previous month.
In September, Caixin China's manufacturing PMI recorded 51.
4, an increase of 1 percentage point from the previous month, rebounding for the third consecutive month and hitting the highest
since March 2018.

2.
On September 27, the National Bureau of Statistics released the profit data
of industrial enterprises from January to August and August.
Unlike the previously announced data that the total profit of industrial enterprises above designated size in China in July was 512.
67 billion yuan, an increase of 2.
6% year-on-year, and the overall upward trend was shown, the growth rate of construction profit in August showed a negative growth trend
.
According to the data released this time, in August, industrial enterprises above designated size achieved a total profit of 517.
79 billion yuan, down 2.
0%
year-on-year.

3.
On September 29, at the fifth press conference to celebrate the 70th anniversary of the founding of the People's Republic of China, Wang Shouwen, vice minister of commerce and deputy representative for international trade negotiations, revealed that a week after the National Day, Vice Premier Liu He will lead a delegation to Washington to hold the 13th round of high-level Sino-US economic and trade consultations
.

International aspect,

1.
On September 19, the Fed announced that it would cut its benchmark interest rate by 25 basis points to a target range of 1.
75% to 2%, in line with broad market expectations
.
This is the second rate cut by the Fed since December 2008
.
In addition, the Fed cut the overnight reverse repo rate by 30 basis points to 1.
7% and the interest rate on excess reserves by 30 basis points to 1.
8%.

2.
The Fed's policy statement states that it will continue to monitor the U.
S.
economic situation and take appropriate actions to sustain the U.
S.
economic expansion
.
Job growth is steady and unemployment remains low
.
The labor market remained strong and economic growth was moderate.

Household spending was strong and investment and exports weakened.

3.
The European Central Bank announced on September 12 that it would cut the euro area overnight deposit rate to -0.
5%, which is the first time the European Central Bank has lowered the key interest rate
in the euro area since March 2016.
At the same time, the ECB changed its interest rate policy guidance and announced the restart of QE, which will buy 20 billion euros of bonds per month from November 1, and the investment in maturing bonds will last for 2-3 years
.

Second, the market review

This month, first suppressed and then rose, rushed back to the bottom and gradually bottomed, and the main operating range of Shanghai copper was 4.
57-47,900
.
Among them, the euro area industrial data at the beginning of the month continued to be weak, copper prices were dragged down to test the annual low of 45,700, and then in terms of monetary policy, the Fed's interest rate cut expectations were basically full, coupled with the euro area easing expectations and other factors, copper prices gradually picked up and fluctuated
。 In terms of Sino-US trade negotiations, Trump announced on Twitter that the decision to impose additional tariffs of $250 billion on high products was postponed to October 15, and China also expressed goodwill and began to inquire about the purchase of U.
S.
agricultural products, soybeans, pork are within the inquiry range, bringing certain benefits to the risk appetite of global investors, copper prices rebounded, rapid upward impact of 48,000, but the upward momentum was subject to the weak impact of refined copper fundamentals, and it rose and fell
again.
Copper prices are gradually transformed into macro policy support, and the fundamental demand for refined copper improves the vibration pattern
.
In September, the European manufacturing industry continued to languish, but the domestic industrial PMI data came under pressure to pick up, copper prices gradually stabilized, and it is expected that after the landing of domestic counter-cyclical monetary policy and infrastructure after the National Day, copper prices still have a strong opportunity
in the medium term.

In terms of the market, this month's Shanghai copper premium showed the effect of the peak season of construction, and the overall good copper premium remained above 100 yuan, and the average monthly premium price was about
150 yuan.
After entering September, the downstream procurement demand gradually expanded, Shanghai copper premium rose all the way to 280 yuan, and then approaching the National Day small long holiday and the end of the month, the holder dumped the goods to pay back, the premium fell rapidly, but the market price willingness is still relatively strong, reflecting the "gold nine silver ten" peak season effect, in the later period with the domestic manufacturing industry is still expected to pick up, it is expected that the premium after the small long holiday may still maintain a high level
.

In terms of import profit and loss, the theoretical import profit this month is open most of the time, and the average monthly import profit is about
50 yuan.
The main reason is that London copper is dragged down by the European manufacturing industry, the overall price momentum is limited, while Shanghai copper benefits from domestic industrial flexibility and counter-cyclical price adjustment and other policies, the price rebound is higher than that of London copper, and the pattern of external weakness and internal strength is visible
.
However, the size of the profit window has always tended to be low, and the downward pressure on the domestic economy has suppressed
the demand for imported copper.

3.
Waste market

In September, copper prices showed a strong and volatile trend, with the main force of Shanghai copper mainly running around 46500-47500 yuan / ton, and the mainstream price of bright copper in the market at 42800-43200 yuan / ton
.
Up to now, the price difference between refined waste has widened to about 1600 yuan, and the market consumer demand has gradually shifted to copper scrap, and some manufacturers have not hesitated to raise prices to find goods
.

With the rise in copper prices and the arrival of the consumption season, the activity of the scrap copper market has increased, the market trading has increased, most of the holders began to sell inventory, the selling sentiment weakened, the market supply also improved, downstream recycled copper manufacturers are optimistic about the market after the market confidence increases, there are more bargain stockers and finished copper rods and other consumption improves, orders are increasing, manufacturers increase productivity, actively enter the market to receive goods at a high price, it can be seen that the market supply and demand side are rising
.
In addition, it is understood that the environmental protection rectification in some areas has temporarily come to an end, and goods manufacturers have begun to resume work, but some manufacturers have suspended business
due to equipment maintenance.

4.
Trend forecast

The arrival of the National Day holiday, short-term copper prices are subject to the impact of the economic situation, combined with the gold nine silver ten still start to pick up, the medium-term copper price has a strong expectation, but it is worth noting that the annual economic malaise seems to be a foregone conclusion, copper prices upward range is limited, copper prices short-term volatility is strong
.
The fourth quarter is still an important focus of the annual consumption recovery, the automotive industry is expected to return to a healthy state under the destocking cycle and policy support, air conditioning production will enter a cyclical recovery stage, but it is difficult to improve the demand, the real estate growth rate is expected to decline slightly, but the recovery of infrastructure growth will make up for the gap
in the decline in real estate.
There are some marginal signs of improvement in demand at the moment, and copper prices are expected to be raised but limited in height next month as the macro environment does not deteriorate
.

5.
Industry news

1.
On September 3, the first batch of copper ore produced by the Mirador Copper Mine of China Railway Construction Tongguan Investment Company was successfully transported from Ecuador to Tongling
.
Since the official completion of the Mirador Copper Mine in Ecuador in July this year, the mining and mineral processing work has made good progress and entered the stage
of stable operation and production.
By the end of August, the mine had completed stripping a total of 4.
21 million tons and produced 22,210 tons of copper concentrate, creating more than 2,400 local jobs
.

2.
Ivanhoe Mines' Kamoa-Kakula copper mine in the Democratic Republic of the Congo has made significant progress in mine development, the project has advanced to the central region with a copper grade of more than 8%, the ore grade is expected to be significantly improved, the construction of the mine and processing plant is also progressing well, and copper concentrate production
is expected to be achieved in the third quarter of 2021.

Peru's Minera Las Bambas has signed a contract with Nokia and Telefonica Peru to launch digitalization and automation projects
at its factory in the south-central region of Apurimac.
Las Bambas is considered the ninth largest copper mine in the world, with 385,000 tonnes of copper produced in 2018, accounting for about 2% of global production, the first time the South American country has adopted this new technology
.

4.
Indonesia's energy ministry has approved a new proposal that Freeport McMoran Inc's copper concentrate export limit be raised to 700,000 tonnes until March
2020, Indonesian officials said.
Freeport's Grasberg mine is expected to produce 1.
2 million tonnes of copper concentrate this year
.

5.
Atex Resources (TSXV: ATX) announced that it has entered into an option agreement to acquire the 3,705-hectare Valeriano copper-gold mine
located in the northern El Indio belt of Chile.
ATEX has committed to investing $15 million in the project over four years, with at least 8,000 metres
drilled for the first two years.

6.
First Quantum recently confirmed that it is in talks with Jiangxi Copper to sell a minority stake in its Zambian copper assets, but First Quantum also said that no deal
has been reached.
First Quantum expects to produce about 718,000 tons of copper this year, accounting for about 3.
5%
of the total global market.