Demand is expected to improve in peak season and copper prices are rising slightly

I. Trend of spot copper price

As shown in the chart above, domestic copper prices fell first and then rose this week. At the beginning of the week, the average domestic spot copper price was 46621.67 yuan/ton, and at the end of the week it was 47576.67 yuan/ton, up 2.05%, down 0.86% from the same period last year.

II. Copper Current Statement

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As shown in the chart above, this week’s main contract price of copper is similar to the spot price trend, both falling first and then rising, but the main contract price is still lower than the spot price, indicating that people are not so optimistic about copper price expectations for the next two months.

New capacity meets the year of overhaul for copper enterprises

During the period of 2018-2019, domestic copper enterprises increased production capacity by nearly 2.47 million tons, and put into operation exceeded expectations, which led to a rebound of supply pressure in the copper market; however, in 2019, when copper enterprises overhauled, the output of copper enterprises in the first half of this year was significantly lower than expected. From January to July 2019, domestic copper refining output totaled 5.713 million tons, down 2.3% from last year. The output showed a downward trend, and since June, copper production began to rise slowly.

Detailed Statistics of New Capacity Increased by Domestic Copper Enterprises in 2018
Detailed Statistics of New Capacity Increased by Domestic Copper Enterprises in 2019
Depression in copper consumption market

Four major consumer industries in the domestic copper industry are power grid investment, household appliances, automobiles and real estate.

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Real estate: From January to July 2019, the average sales value of TOP 100 real estate enterprises reached 63.67 billion yuan, and the number of real estate enterprises with a scale of over 100 billion yuan increased to 15. At the same time, data show that in the first July of this year, TOP 100 real estate enterprises’cumulative performance growth rate was about 4% year-on-year, and the overall growth rate of the industry scale slowed down significantly compared with 2018.

Household appliances: From January to June 2019, the cumulative domestic air-conditioning production was 118,833,000 units, an increase of 7.81% year-on-year; last year, the cumulative growth of 14.4% year-on-year; obviously, this year’s air-conditioning growth rate has declined significantly.

Automobile market: The domestic automobile consumption has declined significantly this year, which is an absolute decline; the cumulative automobile output from January to June 2019 is 12.138 million, which is 15.12% lower than the same period last year; the decline trend of traditional automobiles is obvious.

Power grid: Although the overall plan for power grid construction increased year-on-year.

In summary, copper analysts from the Nonferrous Branch of the Business Association believe that copper has been in a low volatility since the end of May this year. On the one hand, copper production has rebounded since June. On the other hand, the overall consumption of this year is low. Apart from the 5G support of the power grid, other three areas are household appliances, real estate and automobiles. Decline to varying degrees. Copper has risen slightly in the past two days, mainly due to the improvement of Jinjiu consumption expectations, which supported the rise in copper prices. Now is the peak consumption season, copper price shocks are expected to be strong.

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