Trend analysis

According to the monitoring data of business society, the copper price first rose and then fell in October. At the beginning of the month, the copper price was 68796.67 yuan / ton. At the end of the month, the copper price rose slightly to 72063.33 yuan / ton, an overall increase of 4.75%, an increase of 24.34% over the beginning of the year and a year-on-year increase of 39.77%. Since the national day, copper prices have risen all the way to the second highest level of the year on October 18, and then fell slightly.

According to the current chart of business society, most of the copper spot prices in October were higher than the futures prices. The main contract is the expected price in two months. Now the basis has widened, indicating that everyone is not very optimistic about the future of copper price.

Macro factors: in early October, crude oil hit new highs and the US dollar fell sharply, boosting metal prices. Later, the economic data of China and the United States were lower than market expectations, which increased investors’ concerns about the slowdown of economic growth and put pressure on metal prices. In order to ensure market order, LME conducted copper trading investigation and made copper prices lower.

In terms of supply: the electricity price soared, the pressure on the supply side increased, and the maintenance of smelters in Guangxi was completed, but there is still a certain gap between the output and full production; The capacity utilization rate of local smelters in Jiangsu is about 50%. In September 2021, the import volume of unwrought copper and copper products was 406000 tons, with a month on month increase of 3.1% and a year-on-year decrease of 43.8%. From January to September 2021, the cumulative import volume of unwrought copper and copper products was 4019000 tons, a year-on-year decrease of 19.5%, and the average price was 60400 yuan per ton, an increase of 37.9%.

In terms of demand: power rationing in some main copper rod production areas in East and South China will affect the commencement. In September 2021, the operating rate of wire and cable enterprises was 84.32%, an increase of 0.55% month on month. The operating rate of wire and cable enterprises is expected to be 82.32% in October.

Inventory continued to decline

Based on the above situation, power restriction has an impact on the supply and demand of copper. The supply of copper and scrap copper in China is increasing, but the demand slows down. Although the power shortage may inhibit smelting, it also suppresses the growth of consumption. Although the domestic downstream end consumption performance is average, the refined copper inventory continues to fall, and will continue to decline in the future, which supports the copper price. November is the off-season for consumption, and demand is expected to weaken further. Copper prices are expected to remain weak in November.