Weak fundamental support Copper is weak or difficult to change in the medium term

The largest downstream consumption of copper is wire and cable, accounting for about 50% of copper consumption, and the cumulative year-on-year growth rate of grid infrastructure investment in the first half of this year remained at about -20%, seriously dragging down the overall demand
for copper.
Automobile production has also declined month by month in the past three months, which is difficult to drive copper consumption
.
National real estate development investment data is also less optimistic, and demand for copper is weakening
.
The first half of this year's air conditioning production is still a bright spot, 2017 is the big year of air conditioning production, the driving effect on copper prices, in the context of the high base in 2017, air conditioning production in May 2018 still maintained double-digit growth, greatly driving copper demand
.
However, according to empirical data, March, April, May and June are the peak seasons for air conditioning production, and July begins to enter the off-season, and the driving effect on copper prices will also weaken.

As an economic leading indicator, China's manufacturing PMI in June was 51.
5%, down 0.
4 percentage points from the previous month, and the new orders index and raw material inventory index were the two indicators with the largest decline in the classification index, of which the raw material inventory index was 48.
8%, continuing to decline, indicating that downstream enterprises are not optimistic about the future market and are not active
in stocking.
China's copper consumption accounts for about half of global copper consumption, and the increase in downward pressure on China's economy is bound to trigger market concerns about copper consumption and suppress copper prices
.

An important reason for the market's optimism about copper prices at the beginning of 2018 is that 2018 is a big year for copper mine salary negotiations, and supply disruptions will significantly increase copper prices
.
However, half of 2018 has passed, and there have been no large-scale strikes
in copper mines everywhere.
Salary negotiations at the much-watched Escondida copper mine are progressing relatively well, and it is reported that BHP Billiton has submitted a new contract proposal to the union, and the Chilean government is also trying to facilitate the matter
.
At the same time, domestic refined copper production still maintained rapid growth, and the cumulative value of refined copper production from January to May was 3.
623 million tons, a cumulative increase of 11.
1% year-on-year, at a high level
in nearly two years.
Previously, the CSPT meeting failed to agree on TC in the third quarter, suggesting signs of easing tight supply
.

It should be noted that LME copper stocks gradually declined after hitting a relative high of about 388,000 tonnes at the end of March, and by July 17 they had fallen to about 260,000 tonnes, and SHFE cathode copper stocks also showed signs of
decline.
The overall decline in inventories is expected to provide some support
to copper prices.

Overall, the fundamental support is weak, the tight supply situation has eased, the copper mine strike is a small probability event, the downstream air conditioning market will also enter the off-season, China's economic downward pressure is greater, coupled with the Sino-US trade war on the global economic drag, the later copper consumption is not optimistic
.
Therefore, although there is a demand for a technical rebound in copper prices in the short term, it is subject to fundamentals and macro environment, and it is weak or difficult to change
in the medium term.