September 2020 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
The latest revised data released by Eurostat shows that due to the impact of the new crown pneumonia epidemic, the eurozone GDP fell by 11.
8% month-on-month in the second quarter of this year, and the EU GDP fell by 11.
4%
month-on-month.
This is the biggest economic decline since the European Union began in 1995
.

2.
The data showed that the preview of the Eurozone services PMI in September fell to 47.
6 from 50.
5 in August, which was lower than all previous expectations of all institutions
.
The eurozone economic recovery has stalled as coronavirus cases have increased and service sector activity has
declined.

3.
The US producer price index (PPI) rose 0.
3% month-on-month in August, a larger-than-expected increase, but less than the 0.
6%
increase in July.
Demand suppressed by lockdowns is recovering, and producers are gradually gaining bargaining power
.

4.
US ADP employment recorded an increase of 428,000 in August, the third-largest increase on record, but still below the expected 950,000
.
Not enough, the previous ADP data has repeatedly "followed" the non-farm payrolls data for sharp adjustments, and the recent reference role has weakened
.

Domestically,

1.
According to data from the National Bureau of Statistics, in August, China's manufacturing purchasing managers' index (PMI) was 51.
0%, down 0.
1 percentage points from the previous month, indicating that the manufacturing industry is generally running
smoothly.
However, the small business PMI was 47.
7%, down 0.
9 percentage points from the previous month and still below the tipping point
.

2.
China's Caixin service PMI 54.
0 in August, 53.
9 expected, 54.
1 in the previous month, in the expansion range for four consecutive months
.
China's Caixin composite PMI for August was 55.
1 vs 54.
5
previously.
Employment in the service sector began to pick up in August, and manufacturing employment was close to an inflection point
.

3.
According to data from the National Bureau of Statistics, in August 2020, the ex-factory price of industrial producers nationwide fell by 2.
0% year-on-year and increased by 0.
3%
month-on-month.
The month-on-month increase in PPI declined, the year-on-year decline narrowed, industrial production continued to improve, and market demand continued to recover
.

4.
According to customs statistics, in the first eight months of this year, the total import and export value of China's trade in goods was 20.
05 trillion yuan, down 0.
6% from the same period last year, and the decline was 1.
1 percentage points narrower than that in the previous seven months
.
The import and export of general trade increased and the proportion increased; growth in imports and exports to ASEAN, EU and Japan; The import and export of private enterprises increased and the proportion increased
.

Second, the market review

In September, the traditional consumption season was not fulfilled, copper prices rushed back down, Shanghai copper closed to, monthly decline or
.
Driven by the expected sentiment of the peak season, the copper price rose at the beginning of the month to 53,000, while the market consumption did not improve significantly, and the copper price trend at the end of the month began to weaken
from shock.
The fundamental support effect is weakening, the impact of raw materials is weakening, the price of copper concentrate TC floor is rising, overseas warehouses have continued to concentrate at the end of the month, LME inventories have increased sharply, and there are signs of postponement in the domestic peak season, which is difficult to provide rebound momentum
for copper prices to break upward.

On the macro front, the preliminary value of the manufacturing PMI of overseas countries showed that it maintained expansion, and China's official manufacturing PMI recorded 51.
5 in September, while due to the impact of the second outbreak of the overseas epidemic, the service industry data in Europe and the United States shrank, risk aversion spread, and the US dollar index rebounded at a low level, putting pressure on non-ferrous metals
.
Doubts about the progress of economic recovery, restricting the rebound of copper prices, copper prices in the fourth quarter are still expected, but the short-term high breakthrough momentum is limited, and there may be weak performance
after the holiday.

In the market, spot copper fell 760 yuan this month, ending a five-month upward trend
.
The premium has been continuously reduced, and the good copper premium for the month is now maintained at around 150 yuan, and the downstream consumption is not as good
as expected in previous years.
On the whole, except for the 21st-25th downstream long holiday before the holiday, there are more early replenishment and market, and buying has been relatively weak
.
At the same time, due to the price difference factor, there is little imported copper inflow this month, but the destocking 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 900 yuan / ton, narrowing to less than 200 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 September, copper prices fluctuated at a high level and shifted their center of gravity downward, and spot copper prices fell by about
800 yuan / ton compared with the end of last month.
Due to the shortage of waste raw materials in the market, scrap prices were firm, unchanged
from the end of last month.
Foshan area high-quality bright copper reported 46800 yuan / ton
.
The difference in refined waste was reduced from 2,400 yuan at the end of last month to about
1,400.

In the past two months, the import of copper scrap has been greatly reduced, and the inventory of goods merchants in the past few years has basically been exhausted in August, and the price of copper scrap has fallen
under the shortage of domestic supplies.
In the case of a decline of nearly 1,000 yuan in spot prices this month, the price of copper scrap remained firm, maintaining the same price as at the end of last month
.
As the benefits of the traditional peak season in September have not been fully reflected, shippers have taken advantage of the high prices to complete most shipments
before the holiday.

National Day and Mid-Autumn Festival are approaching, Zhejiang, Jiangxi and other places have announced that the furnace will be suspended on the 24th, and the receipt of goods will be suspended after the 27th, and the notice will resume normal after the long holiday, hoping that the bosses will determine the short-term operation arrangements
in advance.
In addition, the twelfth batch of import restrictions in 2020 has been confirmed, of which this batch of copper scrap import batches 154 times, with a total copper scrap amount of 136335 tons
.

4.
Trend forecast

In September, Shanghai copper fluctuated at a high level, and the price center of gravity shifted downward, and the overall maintenance was above the 50,000 mark, showing a volatile pattern
.
The domestic industrial peak season in September was not strong and the price momentum weakened, and the Shanghai copper inventory in the previous period has not yet been trended out of the warehouse, coupled with the slowdown in the growth rate of air conditioning production and power grid investment in September, resulting in the rise of Shanghai copper prices in the month
.
However, the market is still confident in the recovery of domestic industry after November, and the slight increase in domestic manufacturing PMI in September and the continued growth of imported refined copper have formed copper price resilience, maintaining the Shanghai copper center of gravity of 50,000
.
It is worth noting that factors such as the upcoming November holiday, the imminent US election and the risk of a second outbreak of the epidemic in Europe on macro news may lead to an increase
in LME copper price volatility during the holiday.
Follow-up comprehensively, the copper market may be under pressure in October, pay attention to the price correction after November, and continue to pay attention to the copper inventory out after
November.

5.
Industry news

Ivanhoe Mines' Kakula copper mine in the Democratic Republic of Congo has a total underground development scale of €1.
842 billion, bringing the total scale of underground development completed to date to more than 20 kilometers, about 6 kilometers ahead of schedule, with the first concentrate production
scheduled for the third quarter of 2021.

2.
Copper mining in Peru, the world's second-largest copper producer, has almost completely recovered from the impact of the pandemic, with copper production in July at 198,796 tonnes, down 2.
2%
from a year earlier.
Copper production in the first half of 2020 was down 20.
4%
compared to the same period in 2019.

India plans to tighten its monitoring of copper and aluminum imports, while enacting policies to restrict copper and aluminum imports from China and other Asian countries to protect domestic producers
, two government sources and an industry official said.

4.
Recently, the EI Teniente copper department under Chile's national copper industry signed a collective agreement with the local union management, which came into effect on November 1 this year and is valid for 36 months
.
Since the outbreak of the coronavirus pandemic in March, the world's largest copper miner has been able to sustain production
in general.

5.
Tongling Nonferrous Metal said that the situation related to the Mirador copper mine was greatly affected by the epidemic, and after resuming work and production, the production and operation were good, and the copper metal exceeded the production plan by more than 100 tons
in a single week last week.
The group company is going all out to accelerate the pace
of the project reaching the standard and production.

6.
Canada's First Quantum Minerals Ltd said on Monday it plans to expand operations
at the Kansanshi copper mine in Zambia, Africa's largest copper mine.
It is planned to expand the annual capacity of the sulphide ore processing plant at the Kansansi copper mine by another 25 million tons, which will increase annual production explosively to 52 million tons
per year.