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Medium-term logic: the rigid increase in global copper concentrate supply in the next 5 years is relatively small, and the elastic increase mainly depends on the price, and although the refining capacity is more launched, but limited by the supply of copper concentrate, the actual supply increment is not enough to make the copper price fall again, so the medium-term copper price bottom is expected to be obvious
.
Short-term logic: From the supply side, the pressure is mainly concentrated from the end of 2018 to the first quarter of 2019, and from the current production capacity, the production time may be more concentrated
.
However, the short-term supply elasticity is not high, however, the current refined waste spread has further widened, coupled with international traders finalizing the long-term premium in advance, revitalizing short-term available inventory, spot strength has declined, and arbitrage forces continue to retreat to 1812 contracts
.
On Wednesday, the spot market premium continued to fall, the current copper price continues to hinder downstream enterprises to purchase, downstream only need to purchase, so the market to take over the strength is insufficient; The willingness of arbitrageurs in the spot market to sell goods for cash is still very strong, and in the end, spot almost completely turned to a small discount, but the transaction still did not improve significantly
.
In addition, from the perspective of term structure, the 1812 contract has strengthened, indicating that the arbitrage force continues to retreat
.
On the 26th, the loss of refined copper spot imports expanded, mainly due to the decline in the strength of the domestic spot market
.
Yangshan copper premium maintained at $120/ton, but the low price quotation has loosened, in addition, according to Bloomberg news, Chilean national copper has finalized the long-term spot with Chinese buyers in advance, the premium is $88 / ton, which means that there may be a round of inventory rotation, bonded zone mortgage inventory is expected to be revitalized, therefore, Yangshan premium is expected to weaken
.
LME inventories continued to decline on Wednesday, continuing to attract declines
in LME inventories as markets around China rose significantly.
The last warehouse receipts fell slightly on the 26th, and we believe that it is still a premium and holiday factor
in the spot market.
Scrap copper was slightly raised by 100 yuan / ton on the 26th, but it was lower than refined copper, and the refined waste price spread continued to widen
.
In terms of news, recently, the CPC Central Committee and the State Council issued the "Rural Revitalization Strategic Plan (2018-2022)", and issued a notice, requiring all regions and departments to seriously implement it
in light of actual conditions.
The rural revitalization strategy has a five-year timeline, which means that demand for power cables continues to remain at high levels
.
In addition, the Fed raised interest rates, in line with market expectations
.
Overall, from the supply side, the pressure is mainly concentrated from the end of 2018 to the first quarter of 2019, and from the current production capacity, the production time may be more concentrated
.
However, the short-term supply elasticity is not high, however, the current refined waste spread has further widened, coupled with international traders finalizing the long-term premium in advance, revitalizing short-term available inventory, spot strength has declined, and arbitrage forces continue to retreat to 1812 contracts
.
