Investment strategy recommendations:
The Federal Reserve raised interest rates by 75 basis points this week, in line with market expectations. However, recently released data show that the U.S. economy has declined. With expectations of radical interest rate hikes, the market is worried that the U.S. economy may be in recession. The domestic macro-economy is still expected to grow steadily, but recovery is currently slow.
At present, the maintenance of domestic copper smelters is basically completed, and the supply of electrolytic copper will increase to a certain extent. The profit and loss of copper imports this week is near the balance point, and overseas copper imports are limited. As of the 16th, domestic electrolytic copper spot inventory was 104,700 tons, an increase of 15,800 tons from June 9. Market inventories have rebounded. On the one hand, the price of Shanghai copper in the next month is significantly lower than the current month's price, which suppresses the procurement needs of downstream companies. On the other hand, after the Federal Reserve raises interest rates, the market has higher expectations for a lower copper price in the future, and the mood is more cautious in purchasing goods. . As domestic output recovers and downstream demand weakens, copper inventory pressure may gradually increase.
The market continued to fall, and stockholders were more willing to raise prices. As of the 17th, the spot premium in Shanghai was reported at 280 yuan/ton, an increase of 135 yuan/ton from the 10th. It is expected that the trading atmosphere in the market outlook will be weak, and spot goods will be shipped at a discount. or become mainstream. The implied volatility of copper options has strengthened this week. As of the 17th, the implied volatility of the underlying futures contract for CU2207 options was 21.75%, and the exercise prices were mainly concentrated at 68,000 and 67,000, which was lower than last week's 70,000.
Overall, the market is currently relatively pessimistic about the economic outlook and terminal demand, and there is still room for copper prices to fall. Strategically, you can use short futures or sell call options strategies.
Recent attention:
Domestic epidemic trends, etc.
∟. Macro information
1. The National Bureau of Statistics released a number of macroeconomic data for May. In May, the added value of industrial enterprises above designated size increased by 0.7% year-on-year and 5.61% month-on-month; the total retail sales of consumer goods decreased by 6.7% year-on-year and increased 0.05% month-on-month; fixed asset investment (excluding rural households) increased by 0.72% month-on-month; the national urban survey unemployment rate It was 5.9%, down 0.2 percentage points from the previous month. From January to May, the national real estate development investment was 5.2134 billion yuan, a year-on-year decrease of 4.0%, of which residential investment was 3.9521 billion yuan, a decrease of 3.0%; the commercial housing sales area was 507.38 million square meters, a year-on-year decrease of 23.6%, of which the residential sales area decreased by 28.1%. %; sales of commercial housing were 4,833.7 billion yuan, down 31.5%, of which residential sales dropped 34.5%.
2. According to "Fed Watch": the probability of the Federal Reserve raising interest rates by 25 basis points by July is 0%, the probability of raising interest rates by 50 basis points is 13.8%, and the probability of raising interest rates by 75 basis points is 86.2%; by September, the cumulative rate of increase The probabilities of interest rates of 25, 50 and 75 basis points are all 0%, the probability of cumulative interest rate hikes of 100 basis points is 8.7%, the probability of cumulative interest rate hikes of 125 basis points is 59.4%, and the probability of cumulative interest rate hikes of 150 basis points is 31.9% .
3. In the early hours of Thursday morning Beijing time, the Federal Open Market Committee (FOMC) announced the latest interest rate resolution. At this meeting, it raised interest rates by 75 basis points, raising the benchmark interest rate to a range of 1.50%-1.75%. The Fed said it was "firmly committed" to returning inflation to 2% and reiterated its view that continuing to raise interest rates is appropriate.
4. The U.S. Bureau of Labor Statistics (BLS) released data showing that the U.S. PPI in May increased by 0.8% month-on-month (expected 0.8%, the previous value was revised from 0.5% to 0.4%), and a year-on-year increase of 10.8% (expected 10.9%, the previous value was revised from 11.0 % revised to 10.9%); core PPI in May increased by 0.5% month-on-month (expected 0.6%, the previous value revised from 0.4% to 0.2%), a year-on-year increase of 8.3% (expected 8.6%, the previous value revised from 8.8% to 8.6%) .
5. U.S. Census Bureau data show: U.S. retail sales in May increased by -0.3% month-on-month (0.1% expected, the previous value was revised from 0.9% to 0.7%); U.S. retail sales (excluding automobiles) increased by 0.5% month-on-month in May (expected) 0.7%, the previous value was revised from 0.6% to 0.4%); U.S. retail sales (excluding cars and gasoline) in May increased by 0.1% month-on-month (0.4% expected, previous value 1.0%).
6. Data released by the U.S. Department of Labor showed that 229,000 people filed for unemployment benefits in the week of June 11, compared with the expected 218,000 people. The previous value was revised up from 229,000 to 232,000.
7. Data released by the U.S. Census Bureau shows: The number of new housing construction permits in the United States in May was 1.695 million, -7% month-on-month. The market expected 1.778 million households. The previous value was revised from 1.819 million households to 1.823 million households; new housing construction started in May was 1.549 million households. , -14.4% month-on-month, the market expected 1.693 million households, and the previous value was revised from 1.724 million households to 1.81 million households; 1.465 million new houses were completed in May, +9.1% month-on-month, and the previous value was revised from 1.295 million households to 1.343 million households.
[Huaan Commentary]
Overseas macro, this week the Federal Reserve raised interest rates by 75 basis points, in line with market expectations. However, a series of recently released data show that the U.S. economy has declined. With expectations of a radical interest rate hike in the future, the market is worried that the U.S. economy may The prospect of recession. Domestic macroeconomics still have stable growth expectations, but recovery is currently slow.
∟. Industry information
1. China’s refined copper output in May was 912,000 tons, a year-on-year increase of 4.7%. The cumulative output of refined copper from January to May was 4.40 million tons, a year-on-year increase of 3.2%. Copper production in May was 1.803 million tons, a year-on-year decrease of 3.3%. The cumulative output of copper products from January to May was 8.26 million tons, a year-on-year increase of 0.1%. (National Bureau of Statistics)
2. According to foreign news on June 16, the workers' union of Chile's state-owned enterprise Codelco said on Thursday that if there is no positive answer from the company's board of directors on Friday, the workers will go on strike. The union insists that the smelter needs a $53 million investment to transform it so that it meets environmental requirements while continuing to operate. Codelco said last week that the smelter has ceased operations while it undergoes maintenance.
[Huaan Comments]
At present, the maintenance of domestic copper smelters has basically ended, electrolytic copper production is in a rapid recovery trend, and market supply will see a certain increase.
∟. Inventory analysis
On June 16, the domestic electrolytic copper spot inventory was 104,700 tons, an increase of 15,800 tons from June 9. Among them, Shanghai's inventory is 69,100 tons, an increase of 6,700 tons from the 9th, and Guangdong's inventory is 22,800 tons, an increase of 6,600 tons from the 9th. The copper inventory in Shanghai Free Trade Zone is 198,000 tons, a decrease of 3,000 tons from the 9th.
Market inventories have rebounded this week. On the one hand, the price of Shanghai copper in the next month is significantly lower than that of the current month, which inhibits the purchasing demand of downstream companies. On the other hand, after the Federal Reserve raises interest rates, the market expects a lower trend in copper prices in the future. Take The sentiment of goods is more cautious.
Spot trading in the U.S. dollar copper market was sluggish this week. Although the premium showed an upward trend, the transactions did not improve. The profit and loss of copper imports during the week was near breakeven, and overseas copper imports were limited. According to Mysteel survey feedback, the recent arrival of overseas copper at Shanghai Port has been relatively low. On the one hand, due to the tight supply of electrolytic copper in the international market, the output of electrolytic copper in countries such as Peru and Chile has been damaged. In Europe, due to tight energy supply, the international copper spot premium As a result, some imported copper has not flowed to the Chinese market. On the other hand, the international market is still disturbed by the epidemic, and there are transportation obstacles, resulting in less electrolytic copper arriving in Hong Kong.
[Huaan Comments]
As domestic output rebounds and downstream demand weakens, copper inventory pressure may gradually increase.
∟. Price difference analysis
The market continued to fall, and stockholders were more willing to raise prices. This week, the spot premium in Shanghai first declined and then increased. As of June 17, the spot premium was reported at 280 yuan/ton, an increase of 135 yuan/ton from the 10th. Ton. The monthly difference back structure has converged.
[Huaan Comments]
The demand off-season is approaching, and inventory pressure will gradually increase. It is expected that the trading atmosphere in the market outlook will be weak, and spot shipments at a discount may become the mainstream.
∟.Option analysis
The implied volatility of copper options has strengthened this week. The option implied volatility and 60-day historical volatility of the underlying futures contracts on June 17 were CU2207, CU2208, and CU2209 were 21.75%, 17.66%, and 16 respectively. % and 11.15%. The exercise prices are mainly concentrated at 68,000 and 67,000, which are lower than last week's 70,000.
[Huaan Comments]
can consider using option strategies in operation.
Disclaimer:
The information in this report comes from publicly available information. Huaan Futures Investment Consulting Department strives to be accurate and reliable, but does not make any guarantees about the accuracy and completeness of this information. You will be responsible for your own investment based on this information. This report does not constitute personal investment advice and does not take into account the special investment objectives, financial situation or needs of individual clients. Clients should consider whether any opinions or recommendations in this report are appropriate for their particular circumstances.
