Trend analysis

Last week, the price of copper fell first and then rose. As of the end of the weekend, the spot copper price was 51,828.33 yuan/ton, an increase of 0.45% from the beginning of the week, a year-on-year increase of 10.46%, and an increase of 5.7% from the beginning of the year. Copper prices remain high and fluctuate mainly recently.

Copper mines are still tight: As the Chilean epidemic gradually eases, Chile's national copper industry has resumed production and projects that were suspended due to the epidemic, and copper output will continue to recover in the later period. It is estimated that this year's copper production in Chile will fall by 1.2% year-on-year to 5.718 million tons. In 2021, Chile's copper output is expected to be 5.824 million tons. As far as Peru is concerned, after September, the problem of road closures in Peruvian communities in the early stage has been resolved, and copper mining in Peru has basically recovered from the impact of the epidemic. Currently at the peak of labor negotiations in South American mines, some mines are not satisfied with the new salary agreement and the risk of strikes has increased. The Chilean Collahuasi copper mine union signed a labor agreement with the mine, and the strike was avoided. However, the risk of strike at the Escondida copper mine has not yet been lifted, and the workers at the Candelaria mine have started to strike on October 8. The strike risk has supported copper prices to some extent.

Copper output growth: China's electrolytic copper output is expected to be 766,900 tons in September, a year-on-year increase of 6.6%; a month-on-month increase of 2.2%. From January to September 2020, China's electrolytic copper production totaled 6.468 million tons, a cumulative year-on-year increase of 0.5%. It is expected that the production of electrolytic copper in October will continue to increase month-on-month, and the growth rate has narrowed.

Downstream consumption: In September, automobile production and sales reached 2.524 million and 2.565 million, respectively, up 19.1% and 17.4% month-on-month and 14.1% and 12.9% year-on-year. From January to September, automobile production and sales were 16.957 million and 17.116 million vehicles, down 6.7% and 6.9% year-on-year. Compared with January-August, the rate of decline was 2.9% and 2.8% respectively. In September, automobile production and sales achieved steady growth.

Based on the above situation, China's industrial production and demand have recovered steadily, the disturbance of the Chilean copper mine strike has not yet subsided, and the overall global inventory is still at a low level. After the end of September, the performance of copper prices will be slightly better.

Related listed companies: Jiangxi Copper (600362), Tongling Nonferrous Metals (000630), Yunnan Copper (000878).

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