Supply-side favors gradually fade Weak market demand dampens copper prices

Cerro Verde copper miners, Peru's largest copper mine, will resume work, ending a nearly three-week strike
.
Freeport Indonesia has also obtained government permission to resume operations and exports within a period of six months
.
This means that its Grasberg copper mine, the world's second-largest copper mine, is expected to re-export copper concentrate overseas in early April
.
In the meantime, the government will consult with the freeport on new mining licences before considering subsequent export plans
.

Coupled with the fact that the Escondida copper mine, the world's largest copper mine in Chile, ended a 43-day strike last week, and the factors that drove the copper price surge in the previous period have all come to an end
.
From the results, it is estimated that the global copper mine supply side will shrink by about 250,000 tons, accounting for about 1.
2% of the total global copper mine production, which greatly eases the supply-side pressure
of the global copper market.
In recent days, China's copper raw materials joint negotiating group (CSPT) has deliberately lowered the second quarter copper processing refining fee to 80 US dollars per ton and 8 cents per pound, which also proves that the global copper supply side is shrinking
.

However, with the end of the copper mine strike turmoil, the supply side can no longer give momentum to the price for the time being, and as the peak consumption period in April and May is gradually approaching, the performance of the demand side will become a key factor
in determining the height of copper prices.

When it comes to market demand, it must be inseparable from the overall domestic economic environment
.
Judging from the data released during the year, China's overall economic form has shown signs of stabilization, and various economic data have shown signs of
recovery.
China's strong March PMI data released this morning has injected a shot in the arm into the market: the manufacturing data in March hit a nearly three-year high, and the manufacturing industry has been expanding for August in a row
.
A few days ago, the expectations given by major institutions for the first quarter GDP growth rate generally reached 6.
8%, which is higher than the economic growth rate of last year, which also shows the market's
confidence in the stabilization of the domestic economic form.

However, returning to the fundamentals of domestic copper market demand, it seems that the situation is not so optimistic
.
From the perspective of the spot copper market, the current situation of market oversupply is obvious, and spot copper has been in a discount state for a long time, indicating that domestic demand has been relatively weak
.
Moreover, the severe form of domestic environmental protection during the year also endangered the living space
of some small and medium-sized copper factories and copper-using terminal enterprises.
In April, the second batch of environmental inspection actions will be successively stationed in 15 provinces and cities including Hunan, Anhui, Xinjiang, Tibet, Guizhou, Sichuan, Shanxi, Shandong, Tianjin, Hainan, Liaoning, Jilin, Zhejiang, Shanghai and Fujian, which will inevitably have a considerable impact
on the market 。 Coupled with the unqualified incident of Xi'an Metro cable detection some time ago, triggering a nationwide special supervision and inspection of wire and cable production enterprises, many cable factories were forced to shut down due to unqualified products, and the cable industry has always been one of the important downstream of copper demand, under the pressure of environmental protection and product audit, market demand will inevitably be suppressed again, so although the domestic peak season is approaching, but the actual market should not be overly optimistic, therefore, it is recommended that businesses maintain a cautious bullish view, expected 4, In May, the operating range of London copper was 5500-6200 US dollars / ton; Shanghai copper 44000-51000 yuan / ton, scrap copper range between 40000-44000
.