Is the copper price of 78,000 the end or the next step?

PART.01

Copper prices have soared recently, hitting new highs! Is it the end or a new step?

Under the influence of multiple factors, copper prices continue to rise. As of the night of April 9, the main domestic copper contract in Shanghai has touched 77,000 yuan/ton! Looking at the previous high of 78,000 yuan/ton, it seems within reach. This makes people wonder, will the rise in copper prices stop here, or will it move to a higher level?

【Doubt】

1. Is this 78,000 yuan/ton the end of copper prices or the beginning of a new round of rise?

2. Under the influence of multiple factors, will copper prices continue to rise?

3. Faced with such high prices of copper, how should we respond to market changes?

【Analyze】

1. Although many factors affect copper prices, supply and demand are still the dominant factors. The current market demand for copper is strong, and the pressure on the supply side is relatively small, which leaves copper prices still with room to rise.

2. Judging from historical data, copper prices tend to continue to rise after breaking through new highs. Therefore, this time's price of 77,000 yuan/ton is more likely to be just a new starting point.

3. In the face of market changes, we should remain calm, pay close attention to market dynamics, allocate resources reasonably, and manage risks well.

To sum up, copper prices continue to rise under the influence of multiple factors, and this price of 77,000 yuan/ton is more likely to be the beginning of a new round of rise. Therefore, we should keep paying attention, do a good job in risk management, and welcome the next wave of rise in copper prices!

PART.02

How should we grasp the next direction of copper prices?

1, Copper market dynamics: historical lows and tight supply

Before discussing the next direction of copper prices, we must first clarify where the main driving force for this rise in copper prices comes from.

First of all, the news of record low copper concentrate spot TC is shocking. The topic of tight supply of raw materials continues to ferment, which gives the market more room for speculation on the shortage of raw material supply. According to data researched by Mysteel, the current spot TC price of copper concentrate has fallen below US$10/ton and reached US$6/ton, seriously deviating from the previous mainstream price range. At the same time, copper concentrate inventories at mainstream domestic ports are also at low levels, and the market is more concerned about mine supply.

2, Smelting maintenance and production capacity adjustment

Secondly, the peak period of domestic maintenance in the second quarter is coming, especially this year’s maintenance, which has been the most concentrated period in the same period in the past three years. There are many maintenance arrangements for more than one month. There are even planned production cuts by copper smelters due to unreasonable TC prices. This has led to market expectations that the subsequent spot supply of electrolytic copper may also be tight. This means that the production capacity adjustments and maintenance arrangements of smelting companies may have an important impact on the trend of copper prices.

3, Geopolitical situation and risk aversion

Finally, the geopolitical situation is turbulent and global investors' risk aversion has increased. This has led many central banks to increase their holdings of precious metal reserves, and the prices of precious metals, including gold, have risen rapidly. As a product with strong financial attributes, copper has room for growth.

However, the above analysis is only a preliminary judgment in the current market environment. The market is constantly changing, and the next direction of copper prices needs to be analyzed and judged based on more market information and data.

Conclusion

For investors, it is crucial to grasp market dynamics, understand market changes, rationally analyze and make decisions.

PART.03

The mystery of consumption changes after copper prices rise

1, Inventory turning point is long overdue

According to Mysteel statistics, taking 2022-2023 as an example, we can see that the inventory turning point has already appeared in mid-to-early March, but so far this year, there has been no obvious turning point in inventory. Although inventories declined at some stages during the period, the decline was small and not sustainable, which cannot fully explain the obvious changes in inventories.

2, Warehouse receipts and inventories continue to grow

At the same time, we can see a significant increase in warehouse receipt inventory. This is mainly due to the poor performance of downstream demand and the continued difficulty in rising spot premiums. Because demand failed to meet peak season expectations, some traders had to convert long-term inventory into warehouse receipt inventory, which also led to domestic delivery brands being more favored by the market than other sources of goods.

3, The quality of copper processed products is insufficient during the peak season

Survey data shows that in February and March, the capacity utilization rates of major domestic copper processed products were at the lowest level in the same period in the past three years. Although the Spring Festival falls in February, the overall performance in March is not ideal, and the peak season quality is insufficient. Some copper processing companies even chose to reduce production and perform maintenance when copper prices rose, and faced resistance to the release of orders.

3, The economic benefits of recycled copper are highlighted

The biggest change brought about by the rising copper price is the price difference of refined scrap copper. As copper prices rise, the price gap between domestic refined and scrap products has widened again, which has further opened the window for recycled copper to replace refined copper consumption, and even alleviated the supply shortage of recycled copper to a certain extent. However, due to the higher profits of recycled copper anode smelting, the actual performance of some recycled copper processing companies in increasing production is relatively limited.

In general, the impact of rising copper prices on consumption is multifaceted. Inventory turning points, warehouse receipts, demand for copper processed products, economic benefits of recycled copper and other aspects may have an impact on consumption. Against the background of price fluctuations, we need to have a deeper understanding of market dynamics in order to better seize business opportunities.