The consumer side is still relatively weak The downward drive of copper prices is still obvious

The new crown pneumonia epidemic has spread globally, and the cumulative number of confirmed cases overseas has increased
rapidly.
As of March 24, the epidemic has spread to more than 180 countries, with a cumulative number of confirmed cases overseas exceeding 340,000, compared with 8,928 on March 1
.
The overseas epidemic is out of control, and many countries such as Europe and the United States have shifted from Buddhist anti-epidemic policies to the current lockdown, but the number of confirmed cases continues to rise and has not yet reached its peak
.

The anti-epidemic policies of major overseas countries have had a great impact on economic development, and their transmission routes are mainly manifested in four aspects: First, the epidemic has aggravated the expectation of a decline in terminal consumption, Saudi Arabia has increased crude oil production and reduced prices, deepened the market's pricing of deflationary expectations, and caused the collapse of the cost of non-ferrous commodities such as copper
.
At the same time, the return of Saudi funds has caused a liquidity run on the US stock market, pushing up market real interest rates and weighing on stock prices
.
In order to maintain stock market cash flow, investors sold gold, copper and other macro-related assets to recover funds, causing gold and copper prices to fall at the same time, which also pointed to deflation
.
Second, the epidemic has caused the deterioration of business conditions and aggravated the decline in related stock prices
.
However, at this time, commercial banks do not provide liquidity to enterprises with deteriorating operating conditions, but recover liquidity, aggravate the rise in interest rates and the fall in stock prices, and investors enter a vicious circle
of selling assets such as gold and copper.
Third, the rise in real interest rates due to illiquidity in the market helped the dollar climb, changing the valuation focus of dollar-priced commodities such as copper
.
Fourth, the lockdown has affected global trade flows, and overseas orders have shrunk significantly, which will have an impact
on the demand side no less than the trade friction.

Although the Fed provides liquidity to the market by cutting interest rates, unlimited QE and other means, and the G7 finance ministers also jointly pledged to stabilize the economy at all costs, the source of liquidity tension (the epidemic) has not been effectively contained, and liquidity runs and deflation expectations cannot be stopped
.
The strong implementation of the policy will only increase the volatility and rhythm of copper prices, but will not change the downward trend
of copper prices.

The supply-side impact is relatively limited
.
Although individual copper mines in South America and other countries have announced that they will reduce the number of workers, mining is a capital-intensive industry with a high degree of mechanization, and the epidemic has less impact on their production
.
Logistics will be slightly affected, and copper concentrate transportation time will be extended, but this will take time
to transmit to the smelting end.
Copper concentrate processing fee TC decreased from $72/mt to $62/mt, but smelters will not reduce production
for the time being compared to the same processing fee period last year.
The main logic of fundamentals is still on the demand side, the current processing enterprise operating rate recovery rate is slow, lack of orders is the main reason
.
From January to February, the growth rate of new real estate starts and completions in China fell off a cliff, infrastructure investment fell sharply, and the growth rate of automobile production and sales basically stagnated
.
Domestic stocks will increase by about 130,000 tons in March and are expected to continue to increase
in April.

On the whole, the overseas epidemic has led to tight market liquidity and deflationary expectations, coupled with the still weak consumer side, which has led to a trend decline in copper prices
.
Technically, copper prices have entered a technical bear market, short-term rebound does not change the pattern of trend decline, later London copper probability will break 4500 US dollars / ton, adopt a rebound short strategy
.