SunSirs: Sep 20

1. Trend Analysis

The domestic copper prices fell slightly this week. At the beginning of the week, the average domestic spot copper price was 47,815RMB/t, and it dropped 0.86% to 47,403.33 RMB/t at the end of the week. It was 1.57% lower compared with the beginning of 2019 and 5.14% lower year on year.

2. Market Analysis

Prices of CU and CAD: CU Index opened at 47,950RMB earlier this week and then went down under pressure. it rose above 47,000RMB at the end of the week, stabilizing and rocking. This week, it closed at 47,130 yuan, down 0.78%. LME copper in March fell from a high of 5,964.5USD to 5,776USD at the beginning of this week. With a 2.22% drop in the end of the week, the closing price was 5,833.5USD.

On the supply side, data released by the World Bureau of Metal Statistics (WBMS) Wednesday showed a shortage of 27,000 tons in the global copper market from January to July 2019 and a global mine copper output of 11.62 million tons from January to July 2019, 0.5% lower year on year. From January to July 2019, the global output of refined copper was 13.26 million tons, a decrease of 3.2% year on year. The output of India and Chile decreased significantly, fell 96,000 tons and 19,900 tons respectively. In July 2019, the global output of refined copper was 1.991 million tons.

On the consumption side, from January to July 2019, the global copper consumption was 13.29 million tons, compared with 13.78 million tons in the same period last year. From January to July 2019, China's apparent demand was 6.754 million tons, 3.9% lower than that of the same period last year. The output of the 28 EU countries fell 2.6% and the demand was 1.885 million tons, 6.0% lower year on year. In July 2019, the consumption was 1.994 million tons.

On the inventory side, the inventory at the end of July was 144,000 tons more than that at the end of December 2018. This increase includes 156,000 tons net shipment to LME warehouse and 31,000 tons net shipment to Shanghai warehouse. COMEX copper stocks fell 65,000 tons in the first seven months of this year.

On the macro level, the domestic economic data released this week are generally poor, there are worries about stagflation caused by the surge in crude oil prices over the weekend, and Sino-US trade relations remain unclear.

3. Prospects for the Future Market

In summary, the analysts from SunSirs believes that the supply of mines is tight, which can support the copper prices. It is expected that the copper market will improve fundamentally, but it still needs time. The short-term spot market is tight and balanced and there are late demand expectations and monetary easing, there are still opportunities to boost copper prices. The short-term copper market would maintain a narrow fluctuation trend.

Relevant listed enterprises: Jiangxi Copper Industry (600362), Tongling Nonferrous

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