1、 Trend analysis
On February 25, spot copper continued to soar. Spot copper broke 70000 yuan, offering 70111.67 yuan / ton, up 2.86% over the previous trading day, 20.98% over the beginning of the year, and 54.03% over the same period last year.
Macro exceeding expectation
Macro factors exceeded expectations and major economies recovered. Due to the smooth progress of the vaccine, the overseas economy has entered the stage of accelerated recovery; the overseas monetary and fiscal policy has been relaxed, and the inflation is stronger than expected; Biden advocates “multilateralism”, and vigorously promotes the fiscal stimulus of $1.9 trillion with the fast track procedure, and the scale of fiscal stimulus will far exceed the market expectation, and the global political and economic environment will be better.
Copper disturbance
Before the Spring Festival, Peru’s epidemic situation led to the blockade of land traffic in some mining areas, coupled with Chile’s bad weather, resulting in some ports unable to load and unload, and the supply of concentrate was disturbed, with TC falling to about $40 in a row. Recently, the weather in Chile has improved, but the port concentrate inventory is still at a low level, and the TC repair is slow.
Low dominant global refined copper inventory
The global dominant inventory of refined copper (LME + Comex + SHFE + bonded zone) is still at the low level in the past five years.
About 70% of the new production was concentrated in the second half of the year
The new production in 2021 may be mainly concentrated in the second half of the year, and the new production in the first half of the year: the second half of the year = 3:7. In 2021, about 599000 tons of mineral copper output will be added to the new mine and the old mine technical transformation and expansion projects. However, the national Copper Corporation of Chile and BHP Billiton have reduced their predicted output due to mine aging, ore grade decline and other reasons. Therefore, the total global mineral copper output in 2021 is expected to increase by 422000 tons compared with that in 2020. According to the production schedule of new mines, the increment of copper output in the first half of 2021 is about 201 thousand tons, and that in the second half is about 398 thousand tons. The new output in the first half of 2021: the second half is 3:7, and the new output is mainly concentrated in the second half of 2021.
Copper price ushered in a strong market like 2011
According to the data of business news agency, the spot copper price has reached a new high in nearly a decade, which is equivalent to the copper price level from January to August 2011. Historically, the global economy was hit hard by the financial crisis in 2009, and the growth rate of global GDP fell to the bottom. At the same time, the growth rate of global refined copper production was only – 1.67%. Then in 2010-2011, the global quantitative easing and economic stimulus plan promoted a strong economic recovery, driving the copper price to a record high in 2011. Correspondingly, the growth rate of global GDP in 2020 will be hit by health events or hit a record low, while the growth rate of global refined copper production will also hover around 0%. However, with the development of vaccines and the promotion of the global economic stimulus plan, the global economy ushered in a strong recovery, and the copper price ushered in a strong rise in 2011.
High breakthrough space or limited
The resumption of scrap copper enterprises this week may alleviate the shortage of copper supply to a certain extent. The recent rise of copper price may be a bit excessive, reaching the high price level in 2011. The highest price of copper in 2011 is about 75000 yuan / ton, which means that there is limited space to continue to break through.
To sum up, there will be a record gap in the refined copper market, a global green wave, the development of new energy vehicles and other industries, the Supply Prospect of copper concentrate is still pessimistic, the macro loose environment will also provide support, and the copper price will continue to rise. With the resumption of work after the Spring Festival, higher demand and the recovery of overseas economy, copper prices are still strong. However, the consumption has reached a high level in the past ten years, and the power to continue to climb is insufficient. It is expected that the copper price will fluctuate at a high level in the short term.
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