September 2022 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1, the author of the book "Black Swan" Taleb said in an interview with the media that thanks to zero interest rates, everyone has spent 15 carefree years at Disneyland, and now people under the age of 40 "have not much market experience"
.
It said that the Fed's low interest rate policy has created bubbles or "tumors" in the bitcoin, real estate, hedge fund markets, which should not have existed
.
He said the Fed should return interest rates to normal
.
It believes that this level is around 3%-4% and should not deviate too much
.
Taleb agreed that the U.
S.
economy is already in recession, adding that all stocks need to fall in earnings, but that this will not happen in an orderly
manner.

2.
U.
S.
mortgage rates broke through 6% this week, and the average interest rate of 30-year fixed-rate mortgage loans climbed to 6.
02% this week, up from 5.
89% last week and 2.
86%
a year ago, according to a survey of lenders released on Thursday by US mortgage giant Freddie Mac.
The last time interest rates were so high was in 2008, at the height of the financial crisis, when the United States was in deep recession
.

3.
According to preliminary survey data recently released by S&P Global, the preliminary value of the Eurozone composite purchasing managers' index (PMI) in September was 48.
2, down from 48.
9 in August, and it was below the boom-and-bust line of 50 for three consecutive months, which is also a new low
in 20 months.
This portends a sustained downturn
in the eurozone throughout the third quarter.
The Composite Purchasing Managers' Index is a measure
of total output in manufacturing and services.
This indicator above the boom and bust line of 50 means that the economy of the relevant industry is expanding, and vice versa, it is contracting
.
Economists say soaring energy prices and a rising cost of living have not only hit demand, but in some cases constrained manufacturing production and service sector activity
.

Domestically,

1.
China Galaxy Securities Research Report said that the home appliance industry slowed
down in the second quarter due to the outbreak of the epidemic in some parts of the country and weak overseas demand.
Looking forward to the future, the home appliance industry will gradually eliminate external negative factors such as rising raw material prices and poor shipping, marginal improvement of real estate prosperity under the background of stable growth, gradual implementation of consumption policies, and the release of demand suppressed by the epidemic to promote the improvement
of demand for home appliances.
It is recommended to pay attention to two main lines, one is the traditional home appliance faucet that benefits from the improvement of fundamentals
.
Second, pay attention to the leaders of sub-industries with high prosperity
.

2.
According to data from the Passenger Association of China, from September 19 to 25, the retail sales of passenger cars were 465,000 units, a year-on-year increase of 25%, an increase of 26% from last week, and an increase of 7% over the same period last month; Passenger car sales totaled 532,000 units, up 41% y/y, up 24% m/m and 18%
m/m.
From September 1 to 25, the passenger car market retailed 1.
259 million units, up 15% y/y and down 2%
m/m.
Passenger car manufacturers nationwide sold 1.
443 million units, up 33% year-on-year and 12%
month-on-month.

3.
The China Federation of Logistics and Purchasing and the Service Industry Survey Center of the National Bureau of Statistics jointly released the China Purchasing Managers' Index
for September today (30th).
Among them, the manufacturing purchasing managers' index rose back to the expansion range of more than 50%, and the economic trend was stable and improving
.
China's manufacturing purchasing managers' index (PMI) in September was 50.
1%, up 0.
7 percentage points from the previous month, and returned to the expansion range after running below 50% for two consecutive months, indicating that the economic trend is stable and improving
.
(CCTV News)

Second, the market review

In September, Shanghai copper fluctuated
widely.
In the first half of the month, the overall price was at a high level, during which there was a one-day increase of about 2,000 yuan / ton
.
Since the second half of the month, the trend of copper prices has fluctuated and declined, and the center of gravity has continued to shift
.
Represented by Yangtze River spot 1# copper, the average price at the beginning of the month was 61880 yuan / ton, fell to 60570 yuan / ton on September 2, and rose to 63990 yuan / ton on September 13, the highest price point in the month
.
After that, the price fluctuated and declined, and as of September 28, the average price of spot 1# copper in the Yangtze River was 61,550 yuan / ton
.
Overall, the difference between the highest price and the lowest price in the month was 3420 yuan / ton
.

Under the macro dominance, copper prices mainly fluctuate
in the opposite direction of the US dollar index.
At the beginning of the month, copper prices retreated
from their highs at the end of August due to Powell's hawkish comments at the annual meeting of global central banks.
Subsequently, with the landing of the US August non-farm payrolls data and CPI data, copper prices rose first and then declined
.

After the Fed raised interest rates by 75BP in late September, copper prices entered a period of weak shock, followed by a heavy decline
after PMI data unexpectedly exploded in Europe and the United States exceeded expectations.
Affected by the exchange rate, the internal disk is relatively resistant to decline compared with the outer disk, and the current main operating center of gravity has moved down above
60,000.
Inflation remains high, and the Fed's hawkish interest rate hike is firm; With accelerated recession in Europe, repeated geopolitical conflicts and energy crises, it is a foregone conclusion that the dollar index will remain strong this year
.
And this year's "Golden Nine Silver Ten" traditional peak season demand expectations are difficult to verify
.

In the long run, the global liquidity tightening is accompanied by a recession or inevitable, and the contradiction between supply and demand is expected to be repaired, and the background of the copper bear market is determined
.
The current copper price is expected to continue to fluctuate and there is a chance of rebound, but the upper space is limited, and it can be
sold short at the high.
In late October, copper prices may again shift downward
.

3.
Waste market

In September, the Shanghai copper shock weakened, and the copper price fell at the beginning of the month, and the mentality of cargo holders aggravated, and only a few resources could be supplied
normally.
There are many empty orders in the market, and the goods are received at a slightly higher price, and the quotation is disordered
.
On the 9th, the market rose rapidly, upstream merchants shipped at a high price, profit left, scrap copper market trading atmosphere heated up, while Jiangxi Shangrao copper factory adjusted prices several times to grab goods, and actively prepared goods
before the Mid-Autumn Festival.
The interest rate hike after the holiday is approaching, and the market mostly keeps clearing positions on the sidelines
.

On the 22nd, the Fed raised interest rates by 75, in line with market expectations, Shanghai copper opened low and went high, and copper prices were not much different
.
However, copper prices began to fall on the 26th, trade profit margins narrowed, market confidence was low, and fear of decline increased
.
The National Day is approaching, the current market supply is in short supply, and copper factories in Hubei basically have no inventory
.
Downstream orders are not as good as in previous years, and there is no willingness
to stock materials during the long holiday.

The recent relatively poor market, coupled with the decline in subsidy policies, a copper factory in Anhui Province has recently experienced financial problems
.
In addition, Henan Gongyi copper enterprises have maintenance plans during the National Day, and the overall number of copper plants in reserve is scarce, and there will be a price reduction before the holiday, and it is expected to recover
after the holiday.

4.
Inventory

Overseas, LME copper stocks have continued to rise sharply, the latest inventory has risen above 120,000 tons, a nearly one-month high, registered warehouse receipts have increased simultaneously, and the proportion of cancellations has continued to decline
.
LME copper stocks continue to increase, suppressing short-term prices, but domestic companies will replenish stocks during the holiday, and it is expected that social stocks will decline again, which will form a bottom support
for prices.

In terms of domestic social inventory, it is still at a low level in recent years, and it is also at a low level
since March this year.
Recently, copper stocks in Shanghai and Guangdong markets have continued to decline, and there is an urgent situation of inventory
.
The Guangdong market is close to the lowest inventory level since 2021, and copper spot premiums have climbed
sharply.
Recently, the Shanghai-London ratio has also performed well, the import profit window continues to open, coupled with the rising domestic spot premium, so that the import profit space expands, and continues to stimulate the import of electrolytic copper customs clearance; However, due to the small amount of copper overseas, the inventory in the bonded zone is relatively low, so the customs clearance volume is only maintained in a small amount; However, the inventory of the bonded zone continued to show a slight downward trend
.

On the whole, the tight supply of the spot end has a strong supporting effect on copper prices, which will be more reflected in the change of spot premium discount, and it is still necessary to pay attention to the sustainability of
destocking in the later stage.
From the perspective of supply and demand balance, under the interference of the supply side in October, even if the amount of stock after the National Day is not large, it continues to maintain a low inventory, and the expectation of market squeeze is still very strong; However, after November, the supply pressure will increase, and it is expected to enter the warehouse state
.

5.
Industry news

1.
Japanese trading company Marubeni has invested in Canadian exploration company Valhalla Metals, which owns exploration assets at the Ambler mine in northwestern Alaska, United States, to expand Marubeni's copper business
.
Marumet paid Valhalla about C$8.
3 million ($6.
2 million) through a third-party distribution on September 16 to acquire a 19.
99 percent stake
in the company.
Valhalla has a 100% exploration interest
in the Ambler area.
The area is known for volcanically formed massive sulphide deposits with high exploration potential
for high-grade copper and other metals such as zinc, lead, gold and silver, Marubeni said.
Valhalla is already investigating mining potential in the Ambler area, but has not yet started mining
.

2.
Tongling Nonferrous Metals: Signed the "Project Investment Agreement" with the People's Government of Tongling Municipality of Anhui Province and the Management Committee of Tongling Economic and Technological Development Zone, investing in the construction of high-end copper wire rod production capacity of 500,000 tons/year, by-product sulfuric acid 1.
7 million tons/year, and a total project investment of 10.
3 billion yuan
.

3.
Foreign news on September 22, Saudi Arabia announced the discovery of new gold and copper mines in Medina, in addition to the discovery of copper mines
at four sites in the al-Madiq area of Medina.
These new findings are expected to attract local and international investors
.
The mine is reportedly expected to invest $533 million and is expected to create about 4,000 jobs
.
The mining industry is among the sectors
set to expand under the Vision 2030 goals set by Saudi Arabia's Crown Prince Mohammed bin Salman.
In June, the Saudi crown prince announced that sustainable mining would be a national priority
.

4.
The CEO of the National Copper Company of Iran (NICICO) said that 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
.

MMG expects to invest $2 billion over the next five years to expand its Las Bambas copper mine in Peru and is considering potential acquisitions to further increase production
.
Las Bambas general manager Edgardo Orderique said at the Peruvian mining conference that the company hopes to double copper production by 2025 and another doubling
by 2030.
The mine is expected to produce 240,000 tonnes of copper
in 2022 due to years of declining ore grade and years of declining production due to social conflicts.

Brazilian mining giant Vale said global copper demand is expected to grow by about 20% to 37 million tons
by 2030 due to high demand for electric vehicle batteries.
Copper is also used in automotive batteries and renewable energy systems
.
The company expects its own copper production to reach 390,000 to 420,000 tonnes per year in the medium term, with 285,000 tonnes
expected in 2022.