1、 Trend analysis
Copper prices soared 5.2% to 53280 yuan / ton on Monday after rising continuously on Thursday, and rose more than 2500 yuan / ton in a single day, setting a two-year high. LME copper opened slightly higher today and then rose. The price of LME copper fluctuated after reaching 6633 US dollars. As of the end of Asian market, LME copper closed at US $6589, up 2.49%. Shanghai copper’s main force rose sharply to 53520 yuan after opening today, closing at 52880 yuan, up 4.71%.
Another copper mine in Chile
Chilean trade unions announced on Friday that workers from the zaldivar copper mine under Antofagasta voted to land, with 99% of its members rejecting the collective wage agreement and deciding to strike on July 15. Antofagasta said it would seek a government led settlement and, in combination with the copper business, hoped to reach an agreement through dialogue.
On July 13, centinela, another copper mine under Antofagasta, will also hold a worker’s vote. In 2019, the mine’s concentrate output will be about 196000 tons, and the refined copper production will be about 81000 tons. The total copper production will be 277000 tons, accounting for nearly 4.8% of Chile’s copper production. If the mine strikes, the border impact on Chile’s copper supply will be relatively large.
Under the same external environment, Peru and some other South American countries have taken strict isolation measures to control the epidemic situation. As a result, the output in the first half of the year shrank significantly. However, Chile’s mine control measures were not strict. Although the production increased steadily, there were still great hidden dangers. In recent weeks, with the spread of new coronavirus in Chile, thousands of miners were infected, Miners have tightened safety regulations, tightened shift patterns and suspended construction projects, adding to concerns about the yet to be seen impact on production.
Output of Chile copper mine may decrease by 100000 tons in the second half of the year
Changes in copper production in Chile
According to the data released by the national copper Council of Chile, Chile’s copper production increased by 3.4% to 2.37 million tons from January to May this year. Compared with the sharp decline in Peru’s output, Chile’s output has increased against the trend, which shows that the Chilean government has deliberately played down the epidemic control of mines in order to protect the economy. The consequence of belittling the virus is that not only has Chile’s domestic epidemic worsened recently, but also its miners’ infection rate has been rising.
With the continuous progress of the epidemic situation, the government has to take stronger isolation measures to control the epidemic, which will cause interference to production and projects under construction. In serious cases, production will be stopped. In the second half of the year, Chile’s copper mine production may shrink. The direct or indirect interference caused by the epidemic situation may exceed 100000 metal tons.
Copper stocks rose in the previous period
Copper inventory in the previous period
As shown in the above figure, recently, the inventory of copper in the previous period has rebounded slightly. As of July 10, the copper inventory of the previous period continued to rise to a one month high, and the weekly inventory increased by more than 20% to 137336 tons.
LME inventory hits a new low in four months
LME copper inventory
As shown in the chart above, LME copper inventories have been falling in recent days. The London Metal Exchange (LME) released data on Friday to 181075 tons, which is about a four month low.
The operating rate of refined copper rod enterprises increased by 3.01% in June
In June, the operating rate of refined copper rod-making enterprises was 78.66%, with a month on month decrease of 1.70 percentage points and a year-on-year increase of 3.01 percentage points. Among them, the operating rate of large enterprises is 80.10%, that of medium-sized enterprises is 47.27%, and that of small enterprises is 12.00%. The operating rate in June still showed a small growth, mainly due to the continuous good power cable orders, and the operating rate of cable enterprises in June was still at a high level above 100.
However, in July, the backlog of orders in the early stage was basically completed, and the growth of new orders in the off-season effect was not as good as that in the earlier period. The high copper price also inhibited the demand for terminal procurement, and enterprises felt more obvious about the weakening of orders. In addition, many enterprises mentioned that the impact of scrap copper rod on the order of refined copper rod is obvious, especially in some refined copper rod factories in North China, and even the inventory of finished products is overstocked. Affected by the weakening of orders, copper rod processing costs also fell.
In view of the above situation, the copper analysts of the nonferrous metals branch of the business association believe that: the current demand for copper downstream is fair, and the hidden inventory is not much, so the possibility of large accumulation of future stocks is small. Moreover, the current situation of Chile’s epidemic situation is still grim, there is uncertainty in the future copper supply, and it will take some time for the complete liberalization of scrap copper import. Therefore, the supply side is still tight. In addition, the Federal Reserve has adopted extremely loose monetary policy, so it is expected that copper prices will remain high.