Price trend

According to monitoring data from SunSirs, copper prices fluctuated widely in July, with a price of 68,083.33 RMB/ton at the beginning of the month and a price increase of 69,005 RMB/ton at the end of the month, with an overall increase of 1.35% and a year-on-year increase of 14.92%.

Analysis review

According to the data of SunSirs, the spot price of copper in July was generally higher than the futures price, and the main contract is the expected price in two months. Copper in July was generally bullish. Towards the end of the month, the main basis decreased, which was good for buying hedging.

According to LME inventory, LME copper inventory slightly decreased in July, with copper inventory at a lower level.

Macroscopically, the Federal Reserve raised interest rates by 25 basis points as scheduled. Powell stated at a subsequent press conference that if data allowed, they would raise interest rates in September, but were willing to stop raising rates until inflation dropped to 2%. This year, they would not lower rates, but there were several lawmakers supporting multiple rate cuts next year. The market was betting that the possibility of another rate hike before the end of the year was only 40%, which means that July may be the last rate hike. The domestic policy meeting had set the tone for economic work in the second half of the year, strengthening market confidence, and the market remained optimistic.

On the supply side: The supply of overseas copper concentrate continued to increase, and the spot processing fee TC of copper concentrate increased. Some smelting enterprises had exceeded expectations in maintenance, resulting in a month on month decrease in refined copper production in July. Smelting enterprises purchased raw materials on demand, and the inventory of copper concentrate in Chinese ports was low. The domestic supply of recycled copper was loose, the import loss of recycled copper was expanding, and the price difference of refined waste had rebounded, reaching near the above breakeven point.

In terms of demand: Global copper consumption is expected to increase by about 4% this year, and the global growth rate will slow to 3% in the second half of the year. The main driving force behind the high increase in domestic consumption is still the support of real estate completion. This year, the completion of real estate projects had significantly restored and boosted the home appliance industry in the post cycle. However, looking ahead to the second half of the year, it is necessary to be vigilant about the subsequent weakness of real estate projects. The new energy sector remains an important boost, and the old momentum of real estate and new energy will form a joint force. Overseas consumption was still gradually weakening against the backdrop of high interest rates, and there was pressure on real estate and durable goods consumption, with an expected growth rate of 0.5%.

Market outlook

Based on the above situation, the signs of economic recession in the United States continued to weaken, coupled with domestic policy expectations that had boosted market sentiment, and the macro economy was still in a warm pattern. As of July 28, the growth rate of domestic refined copper supply was slowing down, and the demand side was showing a pattern of not being weak in the off-season. It is expected that copper prices will maintain a resilient and volatile trend supported by demand.

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