Downstream enterprises to purchase at low prices

Since mid-February, Shanghai copper to expand the band to adjust the market, the focus shifted down. The current round of copper prices fall in the March-May consumption season, from the surface to see the consumption season is not busy, China’s bonded area seems higher also confirmed this point. But the current round of copper prices fell slowly, there is no large number of empty one to suppress the situation, and the price did not break down the previous low. Therefore, the overall view, the market there is a big difference: bearish that high inventory will eventually suppress the copper price, see more that China’s copper consumption is acceptable, copper prices do not have a substantial decline in the foundation. We through the field and telephone research, tend to the latter point of view, that the late emergence of copper prices have a greater probability of recovery.

Copper supply tight pattern has not changed

Earlier, the Escondida copper mine strike in Chile, the Peruvian Cerro Verde copper mine strike, and the Indonesian restrictions on copper exports, plummeted copper production. Recently, BHP Billiton’s Cerro Colorado copper mine also has a strike plan. In the long run, the decline in phased copper production will affect the annual copper concentrate supply, the market conservative estimate 2017 copper concentrate long single processing fee TC will drop to 80 US dollars / ton, indicating that the future supply of copper concentrate Tighten. In addition, the copper mine strike not only affected the production of copper, but also increased the cost of copper mining.

Refined copper and scrap copper narrowed

Scrap copper relative to the advantages of refined copper weakened, the current difference between the two has dropped to 800 yuan / ton, much lower than the end of last year’s 3500 yuan / ton.

From the perspective of the smelter, scrap copper and refined copper in a reasonable spread of 1,500 yuan / ton, so all the waste copper smelting state. At present, scrap copper smelting enterprises procurement of coarse copper smelting, due to coarse copper processing fee of 1,300 yuan / ton, while the smelting cost of 1,100 yuan / ton, smelters exist 200 yuan / ton profit. However, the current coarse copper processing fee compared with the fourth quarter of last year, 300 yuan / ton decline, indicating that the continued supply of coarse copper situation is weakening.

From the processing enterprises to see, scrap copper rod sales are good, but high quality scrap raw materials less than normal. The reason is: First, refined copper and scrap copper spreads larger, scrap copper processing enterprises to buy goods, so that the market supply reduction; Second, short-term copper prices fell, while foreign scrap copper offer strong, scrap copper imports continued losses, imports Atrophy.

Terminal demand is good, the stock firm

Into May, copper spot in a slight premium state, downstream companies are still bargain hunting. Research results show that a substantial increase in copper pipe business purchases, and household appliances production and sales growth is closely related. National grid in April tender volume higher than the same period last year, cloth and other good demand for wire and cable, cable and cable enterprises overall operating rate picked up, some small and medium enterprises to expand the scale of production.

Shanghai copper callback is the opportunity to buy

Based on the above research, we believe that copper industry performance is good, copper prices continue to adjust down the space is not. At the same time, from a technical point of view, Shanghai copper 44,000 yuan / ton near the strong support. We believe that the downward adjustment of copper prices is buying opportunities.