1. Futures market review
1. Risk appetite has heated up, and copper prices have opened higher and fluctuated
Figure 1: 60-minute trend chart of Shanghai Copper's main force
Copper prices have been hovering at highs in the past month this week, and Shanghai Copper's main force has opened higher after the holiday, with subsequent runs between 72,300 and 73,000, as of Friday. At three o'clock in the afternoon, the main 2207 contract closed at 72650 points, rising 0.72% or 520 yuan by 6 times on the week. From a fundamental point of view, London inventories continue to decline, supporting copper prices. Domestically, Shanghai resumed work at the beginning of the month, and consumption is expected to pick up; macroscopically, the Eurozone announced on Thursday the end of the era of quantitative easing, and plans to raise interest rates by 25 basis points in July , implying In September, interest rates were raised by 50 basis points, significantly raising inflation expectations; the market is paying attention to the US CPI data on Friday night. When inflation peaks will directly affect the pace of subsequent interest rate hikes by the Federal Reserve. So far, the U.S. dollar index has rebounded and regained 103. At the pass, the performance of external metals is under pressure.
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2. Epidemic control is expected to improve, and consumption has picked up
Spot copper rose by ,160 yuan this week, and good copper rose by 170 yuan on Friday. Shanghai resumed work at the beginning of the month, the inflow of imported copper increased, and downstream buying gradually recovered. However, the overall supply showed ample supply, and the premium gradually decreased. At the same time, the phenomenon of repeated pledges of aluminum ingots was exposed, and surrounding metals were in danger, limiting the market trading atmosphere. In terms of
import profits and losses, the RMB has depreciated slightly this week, and the import profit window has reopened, and the gap is now around 200 yuan/ton.
Figure 2: The trend of electrolytic copper and price premiums and discounts
Figure 3: Import profit and loss and Shanghai-London ratio
2. Scrap market dynamics
Compared with last week, spot copper increased by about 150 yuan/ton, and scrap copper increased by 100 yuan/ton. About tons. The price difference between fine and waste is around 1,390 yuan, which is an increase of 40 yuan compared with last week.
Shanghai and other places have resumed work and production in an orderly manner, and supply has increased; during the holidays, the external market rose . After opening higher on Monday, holders actively sold goods; due to the narrow price difference between fine waste and waste, downstream orders for copper rod factories were weak, and overlapping Policy support has declined, copper rod companies are not willing to purchase, and scrap copper quotations are easy to fall but difficult to rise.
researched that the domestic output of recycled copper rods in May 2022 was 233,000 tons (revised value), and the capacity utilization rate was 40.51% (revised), down 32.8% year-on-year in May last year, and down 18.46% month-on-month in April.
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refined waste price difference continued to narrow based on last month, reaching 1,200 yuan/ton at the end of May. In mid-May, once fell to to less than 600 yuan. Scrap copper basically has no price advantage.
In terms of inventory, most copper factories are now basically empty of raw materials, their losses have further expanded, and manufacturers' willingness to purchase scrap copper to support prices is sluggish.
In terms of policies, Jiangxi's advantage is no longer the same. Yingtan and other places' converted ticket prices have increased to 6.7-7. Copper rod losses have reached more than 500 yuan per ton. Ganzhou requires suppliers to set up self-employed businesses;
In terms of regional differences, Jiangxi's copper rod output in May dropped by more than 40% compared to April ; Hunan's policy performance was the best, and scrap copper prices were the highest in the country; Hubei suffered equally serious losses in order to meet production requirements.
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Shanghai copper opened higher this week and then fluctuated downwards. The following is the market trend of Shanghai copper and Lun copper this week.
OECD predicts that global GDP growth will be 3.0% in 2022, which was predicted to be 4.5% in December last year, and 3.0% in 2023, which was predicted to be 3.2% in December last year. The U.S. economy will grow by 2.5% and 1.2% respectively in 2022 and 2023, compared with the previous forecast growth rates of 3.7% and 2.4% respectively; the Eurozone inflation rate is forecast to be 7% in 2022 and 4.6% in 2023.
Domestic news: China's PPI rose 6.4% year-on-year in May, with an estimate of 6.4% and the previous value of 8%.China's May CPI rose 62.1% year-on-year, and was expected to be 2.2%. The previous value rose 62.1%.
The China Banking and Insurance Regulatory Commission held a small and micro finance special work (telephone) meeting to thoroughly study and implement the recent decisions and arrangements of the Party Central Committee and the State Council on stabilizing the economy, and to exchange current financial support for the implementation of various policies for the relief and development of market entities such as small and micro enterprises. situation and work progress, and arrange the next work. The meeting requested that we focus on the incremental supply of credit and make further efforts. In 2022, we will continue to achieve the "two increases" goal of inclusive small and micro enterprise loans and ensure the incremental expansion of loans to individual industrial and commercial households. Banking institutions must implement credit plans for small and micro enterprises at all levels and further allocate credit resources to areas severely affected by the epidemic. Large state-owned banks must ensure that 1.6 trillion yuan of new inclusive small and micro enterprise loans will be added throughout the year.
According to data from the Passenger Car Association, retail sales of new energy passenger vehicles reached 360,000 units in May, a year-on-year increase of 91.2% and a month-on-month increase of 26.9%. From January to May, domestic retail sales of new energy passenger vehicles were 1.712 million units, a year-on-year increase of 119.5%. In May, the domestic retail sales penetration rate of new energy vehicles was 526.6%, an increase of 15 percentage points from the penetration rate of 11.6% in May 2021.
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Data from the Passenger Car Association shows that the retail sales of the passenger car market reached 1.354 million units in May 2022, a year-on-year decrease of 16.9% and a month-on-month increase of 29.7%. , the month-on-month retail sales growth rate in May was at the highest level in the same period in the past six years. The cumulative retail sales from January to May were 7.315 million units, a year-on-year decrease of 1.07 million units, a year-on-year decrease of 5.86 million units, of which a year-on-year decrease of 5.86 million units from April to May had a greater impact.
The Joint Prevention and Control Mechanism of the State Council held a press conference at 3 pm on June 9. He Qinghua, a first-level inspector of the National Health Commission’s Bureau of Disease Control and Prevention, said: Each locality can make adjustments according to the needs of epidemic prevention and control. In areas where there is no epidemic and no risk of importation, nucleic acid testing should not become the norm.
In US dollars, China's exports in May increased by 16.9% year-on-year, 8% expected, and the previous value of 3.9%. China's imports in May increased by 4.1% year-on-year, which was expected to be 2.8%, and the previous value was unchanged. China's trade surplus in May was US$78.76 billion, and the expected surplus was US$57.7 billion.
Li Keqiang presided over an executive meeting of the State Council, where he listened to a report on the special inspection of stabilizing growth, stabilizing market entities and maintaining employment, and called for clearing up bottlenecks, improving supporting facilities, and giving full play to policy effects. The meeting emphasized that the downward pressure on the economy is still prominent, and it is necessary to efficiently coordinate epidemic prevention and control and economic and social development. All localities must earnestly shoulder the responsibility of ensuring people's livelihood and well-being, and promote the refinement and implementation of economic stabilization policies with a sense of urgency that time cannot wait to ensure economic stability in the second quarter. Reasonable growth and stabilizing the economy and the market .
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Prediction of market trends next week:
Summary: Shanghai copper opened higher this week and then fluctuated downwards. Weekly spot copper prices rose by around ,160 yuan. On Monday, overseas COMEX copper opened higher and rose by . During the session, overseas COMEX copper rose by . Overseas, this week has entered a super week for global central banks. Countries and regions including Australia, India, and the European Central Bank have released interest rate decisions during the week. Among them, the European Central Bank chose to gradually raise interest rates, and the US dollar index rose to above 103 during the week. Pay attention to the US May CPI data tonight, which may determine the subsequent direction of copper prices. Affected by Europe's ban on Russian crude oil imports, international crude oil prices continue to rise and , and high inflation supports copper prices to remain high in the short term.
The World Bank and the OECD have once again lowered global economic growth, and recession expectations have put copper prices under medium and long-term pressure. On the supply side, copper prices experienced a premium during the week due to disturbances from major copper producing countries in South America and low global explicit inventories. From the demand side, the domestic market is focused on restarting the economy and has frequent macroeconomic policies, so the market still has expectations. However, due to the relatively weak reality, it is difficult to support copper prices in a clear upward trend. To sum up, it is expected that the main force of Shanghai copper will maintain a volatile pattern next week. As the Federal Reserve’s June interest rate decision approaches next Thursday, the center of gravity of copper prices may face downward risks. Range reference: Lun copper is 9,300-9,800 US dollars, Shanghai copper is 71,000-73,000 US dollars, and scrap copper is 65,500-67,000 US dollars.
