There is little room for copper prices to continue to adjust downward

The tight supply of copper ore has not changed
.
In the early stage, the strike at the Escondida copper mine in Chile, the strike at the Cerro Verde copper mine in Peru, and the restriction of copper exports in Indonesia all caused a sharp decline
in copper mine production.
Recently, BHP Billiton's Cerro Colorado copper mine also has plans to
strike.
In the long run, the phased decline in copper ore production will affect the annual copper concentrate supply, and the market conservatively expects that the copper concentrate long single processing fee TC will fall to 80 US dollars / ton in 2017, indicating that the supply of copper concentrate will tighten
in the future.
In addition, the copper strike not only affected the production of copper mines, but also increased the cost
of copper mining.

The spread between refined copper and scrap narrowed
.
The advantage of scrap copper over refined copper has been weakening, and the price difference between the two has fallen to about 800 yuan / ton, far lower than about 3500 yuan / ton at the end of last year
.
From the perspective of smelters, the reasonable price difference between scrap copper and refined copper is about 1500 yuan / ton, so scrap copper smelting is all in a loss state
.
At present, scrap copper smelting enterprises purchase crude copper smelting, because the crude copper processing fee is 1300 yuan / ton, and the smelting cost is about 1100 yuan / ton, the smelter has a profit
of 200 yuan / ton.
However, the current crude copper processing fee has fallen by 300 yuan / ton compared with the fourth quarter of last year, indicating that the continued loose supply of crude copper is weakening
.
From the perspective of processing enterprises, the sales of scrap copper rods are good, but there are few
high-quality copper scrap raw materials.
The reasons are: First, the price difference between refined copper and scrap copper was large, and scrap copper processing enterprises bought a large number of goods, which reduced the market supply; Second, short-term copper prices declined, while foreign scrap copper quotations were firm, scrap copper imports continued to lose, and imports shrank
.

Terminal demand is good, spot is firm
.
In May, copper spot is in a state of slight premium, and downstream companies are still bargaining for purchases
.
The survey results show that the purchase volume of copper pipe enterprises has increased significantly, which is closely related to
the growth of production and sales of household appliances.
The bidding volume of the State Grid in April was higher than the same period last year, the demand for wire distribution was good, the overall operating rate of wire and cable enterprises rebounded, and some small and medium-sized enterprises expanded their production scale
.

Based on the above analysis, the copper industry has performed well, and there is little room for copper prices to continue to adjust
downward.
At the same time, from a technical point of view, Shanghai copper around 44,000 yuan / ton has strong support
.
A downward correction in copper prices is a buying opportunity
.