Trend analysis

On the 18th, spot copper soared. Copper was quoted at RMB 62,793.33/ton, up 4.13% from the previous trading day, up 8.35% from the beginning of the year, and up 36.59% year-on-year, setting a 10-year high. Today, LME copper rose sharply in March, and the Asian market closed at $8590.5, an increase of 2.39%. The main trend of Shanghai copper showed an upward trend, the highest closing at 63290 yuan, and the late closing at 63210 yuan, an increase of 3.96%. International copper contracts rose sharply, closing at 56410 yuan in late trading, an increase of 4.21%.

External disk rise

During the long Chinese New Year holiday, the external disk continued to rise sharply, and the US dollar index hit a three-week low, bringing support to the metal market. Among them, the international copper price hit a new high in more than eight years. The London Metal Exchange (LME) copper futures set a multi-year high for the third consecutive trading day. Copper prices have risen by 93% since March last year.

Tight supply

In 2021, the supply of copper concentrate is already tight. Long-term TC is US$60.8/ton, and spot TC is lower than US$50/ton. Compared with the continued expansion of copper smelting capacity, the supply of concentrate is stretched. At the same time, in mid-to-late January, there were disturbances such as the re-blocking of Peru, the wind and waves of Chilean ports, and the blockage of roads at the Las Bambas copper mine by the people, which made the actual supply of copper concentrates may be lower than the original market expectations. From a seasonal perspective, refined copper smelting is the off-season for production from January to February. Domestic smelting maintenance is concentrated in the first quarter, and the lack of raw material supply may further restrict actual output, and refined copper output is unlikely to increase significantly.
Demand

Copper demand, under the initiative of the local Chinese New Year, may recover quickly after the holiday, and actual consumption is significantly better than in previous years. In terms of inventory, the average accumulated inventory in January of the past four years was 14,600 tons, but in January 2021, the inventory dropped by 12,800 tons. According to research, orders in the first quarter were relatively full, which reflects that spot demand is indeed strong.

Summary

In the case of relatively healthy supply and demand, copper stocks may stay low for a long time. After the Spring Festival, copper demand is about to enter the peak consumption season. At the same time, under the background of low overall dominant inventory, copper prices have more momentum to rise.

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

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