In April, the focus of copper prices steadily moved up, and the price of domestic copper once again broke through the 100,000 RMB/ton barrier; the United States and Iran reached a phased ceasefire agreement, and international oil prices fell significantly from the high point, macro sentiment repaired, which supported copper prices. Subsequently, the first round of negotiations between the United States and Iran failed, and the second round of negotiations were shelved, and oil prices returned to the high point, and copper prices were once again suppressed by the macro side. From the fundamental point of view, the turmoil in the Middle East has caused a shortage of global sulfuric acid supply, and overseas mines and wet refining enterprises have reduced production, which has provided strong support for copper prices.

The copper mine supply shortage has intensified

In February, China's output of copper concentrate was 1.134 million tons, a decrease of 14.82% compared to the previous month and a decrease of 9.33% compared to the same period last year. In March, China imported 26.3 million tons of copper ore and its concentrate, an increase of 13.84% compared to the previous month and an increase of 9.86% compared to the same period last year.

On the inventory front, as of April 24th, the processing fee for imported copper concentrate was reported at -81.44 USD/ton, with the price focus continuing to decline; the copper concentrate inventory at the nine major domestic ports was 6.204 million tons, a decrease of 28,100 tons compared to the previous week.

In March, China's output of waste copper was 184,000 tons of metal, a decrease of 8.82% compared to the previous month. Among them, the output of old waste copper was 154,400 tons of metal, a decrease of 8.42% compared to the previous month; the output of new waste copper was 29,600 tons of metal, a decrease of 10.84% compared to the previous month. In March, China imported 2.276 million tons of copper scrap and broken pieces, an increase of 35.5% compared to the previous month and an increase of 19.94% compared to the same period last year.

On April 24th, the price spread between refined and scrap copper was 1,768 RMB/ton, while the reasonable spread was 1,724 RMB/ton. The price spread between refined and scrap copper narrowed slightly during the month, mainly due to a large supply gap of domestic secondary copper raw materials, and the domestic trade quotations remained strong.

In March, China's sample anode copper production was 128,100 tons, a 32.32% increase compared to the previous month and a 9.06% decrease compared to the same period last year. Among them, primary anode copper was 57,800 tons, the same as February; secondary anode copper was 70,300 tons, an 80.17% increase compared to the previous month.

In March, China imported 68,800 tons of primary copper, a 20.97% increase compared to the previous month and a 37.1% increase year-on-year. As we enter the second quarter, the spread between refined and scrap copper prices has narrowed, and policy disruptions in the recycled copper industry have led to a decrease in domestic supplies of refined copper and an increase in the supply of anodes. This has led to a rise in demand for imported anodes. Additionally, since the production started at the Kamoa mine area in April, related shipments have been concentrated in port arrivals. It is expected that in the second quarter, China's imports of anodes will increase. However, due to rising energy costs, there is still uncertainty regarding power supply and logistics capacity in the African region.

In March, China's output of refined copper was 1.2061 million tons, a 5.58% increase compared to the previous month and a 7.49% increase year-on-year. During the month, the processing fee for copper concentrate continued to decline, and the spread between refined and scrap copper narrowed significantly. However, the production of scrap anode plates has not been significantly affected, and the output of refined copper has not experienced a significant reduction due to issues in the raw material sector. The price of sulfuric acid reached a historical high, with some areas quoting as high as 1,600 RMB/ton, driving smelters to maintain high production rates despite the deep negative processing fee pattern.

In April, a total of 8 smelters entered the maintenance period. Among them, 3 smelters continued maintenance from March to April, and 4 smelters from April to May. The expected reduction in output is expected to be concentrated in May. At present, a few smelters have reported that it is more difficult to purchase anodes, and the tight pattern of raw materials is gradually becoming prominent. It is expected that the output of refined copper will decrease by 33,000 tons month-on-month in April, and the impact of maintenance has not yet been fully reflected in the short term. In addition, in April, one smelter officially started production, and the subsequent capacity will be gradually released. With the concentrated maintenance of refined copper enterprises in May, it is expected that the output in May will continue to decline compared to April.

In terms of import and export, in March, China imported 234,600 tons of refined copper, a month-on-month increase of 53.33% and a year-on-year decrease of 24.03%; it exported 58,200 tons, a month-on-month decrease of 25.6% and a year-on-year decrease of 14.4%; in March, China's net import of refined copper was 176,400 tons.

Marginal recovery in terminal consumption

In February, China's copper production was 1.589 million tons, a decrease of 11.79% compared to the previous month and an increase of 1.88% year-on-year. In February, the overall production rate of the domestic copper industry was 42.81%, and it increased to 68.51% in March.

Looking at the data by sector, in March, the resumption of production in the downstream industries of copper was seasonal, with the rates of refined copper bars, copper plate and strip, and copper foil standing out, exceeding the average of recent years.

Power sector, in the first two months, the investment in the construction of the national power grid reached 83.8 billion RMB, a year-on-year increase of 79.84%; the investment in power source projects reached 104.4 billion RMB, a year-on-year increase of 32.35%.

Automobile industry, from January to March, the country's car production and sales were 7.039 million and 7.048 million units respectively, a year-on-year decrease of 6.9% and 5.6%. During the same period, the production and sales of new energy vehicles were 2.965 million and 2.96 million units respectively, a year-on-year decrease of 6.8% and 3.7%. The sales of new energy vehicles accounted for 42% of the total car sales.

Home appliances sector, from January to March, the cumulative production of air conditioners in China was 74.58 million units, a year-on-year increase of 3.8%; the production of refrigerators was 27.22 million units, a year-on-year increase of 9.4%; the production of washing machines was 30.61 million units, a year-on-year increase of 2.7%.

Real estate sector, from January to March, the national housing starts area was 103.73 million square meters, down 20.3% year-on-year; the housing completion area was 97.89 million square meters, down 25.0% year-on-year.

In terms of stockpiles, as of April 23, the LME copper stockpile stood at 3.93 million tons, with a recent slowdown in the increase and a slight decline, with the proportion of registered warehouse orders at 12%; the COMEX copper stockpile was 6.06 million tons, returning to the growth channel. As of April 27, the domestic copper social stockpile was 2.486 million tons, continuing the trend of decline. From a global perspective, as of April 23, the global copper stockpile was 12.46 million tons, an increase of 6.5 million tons compared to the same period last year.

Market sentiment is cautious.

Since the escalation of the US-Israel-Iran conflict on February 28th, the international crude oil price has repeatedly exceeded the $100/barrel mark, the global economic stagnation and inflationary expectations have intensified, which has suppressed the copper price. Currently, the second round of negotiations between the US and Iran has been shelved, the situation in the Middle East remains complex, the Strait of Hormuz is still-blocked, and in the context of a global shortage of sulfuric acid supply, the supply side of the copper market has been significantly disturbed.

Looking ahead to May, on the macro level, the situation in the Middle East continues to be deadlocked, the second round of negotiations between the United States and Iran has been shelved, oil prices are running at high levels, and market sentiment is generally cautious. On the fundamental side, the domestic supply of copper concentrate is becoming increasingly tight, the markets for waste copper and refined copper are also tight, the global supply of sulfuric acid is tight, and the risk of production cuts and shutdowns for overseas copper mines and wet smelting enterprises is increasing. Domestic smelters are undergoing concentrated maintenance from April to May, and there is a downward expectation for production. On the consumption side, after copper prices run at high levels, the downstream is mainly for essential purchases, and the traditional industry peak season supports the seasonal high of the production rate.

Overall, at present, the copper price is affected by the interaction of macro environment and fundamentals, and the situation in the Middle East and the supply of copper overseas are both showing weak resilience. With the premise that the situation in the Middle East does not deteriorate significantly, the supply side has a strong support for the copper price, and it is expected that the copper price in May will maintain a high level of operation, and there is room for the price center to move up.

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