Price trend

As shown in the figure above, copper prices rose slightly this week. By the end of this week, spot copper had offered 64,885 RMB/ton, up 2.84% from the price of 63,093.33 RMB/ton at the beginning of the week, and down 9.73% year on year.

According to the weekly ups and downs chart of SunSirs, the copper price has risen for 7 weeks and fallen for 4 weeks in the past three months. Recently, the copper price has risen significantly.

Analysis review

Macro: The IMF has again lowered the global GDP growth forecast for next year. It is expected that the global GDP growth rate will decline from 6.0% in 2021 to 3.2% this year, and further to 2.7% in 2023. On Thursday evening, the latest US inflation data exceeded market expectations. The US announced that September's CPI was the focus of financial markets. In September, the CPI rose 8.2%, down 0.1 percentage points from the previous month.

On the supply side: the output of overseas copper mines has decreased continuously, and the main copper mines in Peru and Chile have been disturbed by strikes and other factors, resulting in continuous output reduction. Among them, Chile will permanently close the mining area connected to the giant sinkhole. In addition, LME released a discussion paper last week to formally discuss whether Russian metals should be prohibited from trading and stockpiling in its system. In 2021, Russia supplied nearly 292,000 tons of copper to the European Union, and last year, the total import of copper from the European Union exceeded 801,000 tons. Many European consumers are now reluctant to buy Russian metals, so they have to find other sources of supply, which makes the copper market tight at present.

Demand side: The operating rate of copper pipe fell by 4.73 percentage points month on month, and the consumption of real estate and its later household appliances still showed a weak trend. However, as China enters the traditional construction peak season in October and the country continues to introduce stimulus policies, the demand for real estate will probably recover. At the same time, domestic investment in infrastructure is vigorously developed, and the production and sales data of new energy vehicles are bright, providing support for copper consumption. Among them, the production and sales of new energy vehicles in the market from January to September reached 4.711 million and 4.567 million respectively, accounting for an increasing proportion of the national automobile production and sales, with a market share of 23.5%.

Inventory: On October 13, Shanghai Futures Exchange copper increased by 4,425 tons to 14,093 tons. LME copper inventory fell 125 tons to 145,400 tons, an increase of 1625 tons over the beginning of the week.

Market outlook

To sum up, the supply side is supported by the lack of macro space, frequent supply side disturbances and the unwillingness of European consumers to buy Russian copper, but the overall economic growth is slow and the demand is limited. It is expected that the copper price will maintain a strong trend in shock in the short term.

If you have any questions, please fee l free to contact SunSirs with support@sunsirs.com