1、 Trend analysis
Copper prices first fell and then rose in October. At the beginning of the month, the copper price was 111413.33 yuan/ton. At the end of the month, the copper price dropped to 110355 yuan/ton, with an overall decrease of 0.95% and a year-on-year increase of 25.52%.
The copper spot price in October was higher than the main contract price, indicating strong support for copper prices in the future.
According to LME inventory, LME copper inventory fluctuated and rose in October. As of the end of the month, LME copper inventory was 274000 tons, up 10.45% from the beginning of the month.
Macroscopically, the Federal Reserve cut interest rates by 25bp as scheduled in October, but Powell made it clear that another rate cut in December is not a certainty. There is significant internal divergence on the follow-up path, with the US dollar index rebounding and the marginal weakening of financial support for copper prices. On the domestic front, the 15th Five Year Plan proposes to boost market confidence and release signals of partial easing in China US economic and trade relations. However, the pace of domestic demand recovery is slow, and it is difficult to form a sustained unilateral driving force at the macro level.
Supply side: Copper concentrate spot TC reported -42.5 US dollars/dry ton at the end of October, deeply trapped in the negative range and without a turning point, further solidified by rigid constraints at the mining end. In October, the maintenance of domestic smelters involved a production capacity of 2.75 million tons, and the actual output of electrolytic copper was 1.1061 million tons, a decrease of 3.8% compared to the previous month. The peak of maintenance combined with the shortage of raw materials resulted in a temporary tightening of refined copper supply. The tight logic of mining has entered the substantive realization of production from the expected level.
Downstream: The purity of “Golden Nine and Silver Ten” is clearly insufficient. The operating rate of copper cable companies in October fell to 67.8%, a year-on-year decrease of 9.1 percentage points, and the suppression of power grid orders by high copper prices became apparent. The production and sales of new energy vehicles maintain resilience, and the narrative of AI computing infrastructure using copper continues to ferment. However, the traditional construction and home appliance fields are significantly dragged down, with a copper pipe operating rate of only 62%. The demand side presents a fragmented pattern of “emerging with stories, traditional without increment”.
influencing factors
Firstly, the sustainability of mining constraints: If zero or even negative processing fees are confirmed in the long-term single TC negotiations in 2026, the joint production reduction of domestic smelters will shift from “possibility” to “reality”. Secondly, inventory siphoning under the expectation of US copper tariffs: COMEX inventory has nearly tripled year-on-year, global explicit inventory is concentrated in the United States, and available copper sources in non US regions continue to tighten. Thirdly, the negative feedback depth of high prices on demand: whether the collapse of cable operating rates spreads to more terminal areas determines whether the demand side can withstand supply contraction.
In summary, the solidity of the mining tight logic constitutes the core support for the bottom of copper prices, while the strength of the demand side’s “emerging hedging against traditional” is not yet sufficient to drive a trend breakthrough. It is expected that copper prices will mainly fluctuate strongly in November, but the hawkish signals from the Federal Reserve and the further decline in operating rates after the end of the peak season pose downside risks. Pursuing higher prices requires caution, and a pullback to the lower edge of the range provides a good risk return ratio.
| http://www.lubonchem.com/ |