The support below the copper price is obvious, and the probability of touching the previous low again is unlikely

On the first day of the market opening after the holiday, copper prices opened with a drop limit, and the Shanghai copper index once fell to 44,800 yuan / ton, a low level in nearly two and a half years
.
Subsequently, the market sentiment stabilized, and copper prices rebounded
.
Looking forward to the future market, refiners are expected to reduce production, the epidemic turning point is coming, downstream enterprises are gradually resuming work and production, and with the support of domestic monetary policy and fiscal policy, the support below copper prices is obvious, and the probability of touching the previous low again is not large
.
However, the epidemic has had an impact on the short-term economy, enterprises are facing pressure on personnel and logistics control to resume work, the operating rate is difficult to increase significantly, and the upward momentum of copper prices is slightly insufficient
.

Most enterprises across the country began to prepare for the resumption of production this week, but the actual production is expected to be in the second half of the week or even after
the 17th.
East and South China, where copper processing and terminal consumption are more concentrated, are also places where the epidemic is more serious, enterprises are still facing the dilemma of personnel flow and logistics have not yet recovered, processing enterprises have few orders and delivery times are delayed, and the operating rate of cable enterprises is expected to be low
in February.

As of February 11, the inventory of warehouse receipts in the previous period was 99,674 tons, an increase of 27,039 tons from before the Spring Festival.

Therefore, once the market begins to circulate, higher inventories can basically meet downstream demand
.
It should be noted that although the epidemic has little impact on the production process of the smelter itself, the control of logistics has led to a continuous decline in raw material reserves, and the pressure of the by-product sulfuric acid expansion reservoir is large, and existing refineries have begun to reduce production
.
If logistics conditions continue to fail to improve, production is expected
to be reduced in February.

On the macro front, in China's manufacturing PMI sub-indicator in January, the raw material inventory index was 47.
1%, down 0.
1 percentage points from the previous month, continuing to be below the boom and bust line
.
The January PPI rose 0.
1% year-on-year and was flat
month-on-month.
The price level of industrial products is low, and enterprises are not actively
stocking.
In order to calm the impact of the epidemic on the economy, China first injected 1.
7 trillion yuan of liquidity for two consecutive days, and recently the Ministry of Finance issued a new local government debt limit of 848 billion yuan
in 2020.

From the perspective of the external environment, Fed Chairman Powell spoke to the House Financial Services Committee, reiterating confidence in the US economy and hinting that interest rate policy will remain unchanged for the time being, and active repo operations will be gradually canceled, and the probability of maintaining interest rate policy unchanged in March is higher
.
Since January, the dollar index has continued to rebound, especially under the Brexit, the European economic malaise, and China's impact on the epidemic, the dollar has a strong attraction, which has a certain suppressive effect
on the price of copper denominated in the US dollar.
The focus of the market is back on the suppression of the short-term economy by the epidemic, and the resistance to the rebound of copper prices will reflect that copper prices may still be
lowered.