China's restriction on sulfuric acid exports, coupled with the off-season for fertilizer consumption, may lead to a further weakening of sulfuric acid prices. Smelters are facing a double dilemma of losses from ore processing and shrinking profits from by-products, with rising expectations of maintenance.

Since the start of this year, copper prices have first declined and then rebounded. The market operation rhythm is mainly divided into three stages: First, before March, copper prices showed strong financial attributes, and the rapid rise in silver prices provided certain support for copper prices. Second, after the outbreak of the conflict between the United States, Israel and Iran, market panic surged sharply, and copper prices fell to a minimum of 91,500 yuan per ton. Third, the impact of geopolitical conflicts on the market has gradually weakened, market sentiment has tended to ease, and the focus of copper prices has shifted slightly upward.

At present, the market has accepted the durability of the US-Iran issue, and it is expected that the negative impact of geopolitical factors on the market will be limited in the second half of the year.

The Federal Reserve will hold four interest rate meetings in the second half of the year, and the US dollar index is expected to still have room for appreciation, which will have a certain impact on copper prices.

Affected by the tight supply of copper concentrates and the delayed resumption of production at Grasberg, the processing fees for imported copper concentrates have been falling repeatedly this year, and the rate of decline has accelerated since March.

As for scrap copper, affected by the bill supervision policy, the supply of invoiced scrap copper is tight. The maintenance of domestic refineries, the decline in import copper concentrate processing fees and the turn of sulfuric acid prices have a certain stimulating effect on the consumption of anode plates. The problem of tight supply of anode plates will become more prominent, and the supply of scrap copper will still support copper prices in the second half of the year.

After the outbreak of the Middle East geopolitical conflicts, sulfuric acid prices continued to rise to high levels. Although precious metal prices weakened, they still remained at high levels, which has a certain stimulating effect on smelters' production. The weak processing fees of copper concentrate have not had a significant impact on smelters. According to SMM data, the operating rate of domestic smelters was above 83.9% from January to May this year. Coupled with factors such as the release of new production capacity, the domestic refined copper output is relatively high. At present, the processing fees of copper concentrate have dropped to -100 yuan per ton. The tight supply of scrap copper with invoices has increased the pressure on raw material supply for smelters. With domestic restrictions on sulfuric acid exports and the off-season for fertilizer consumption, sulfuric acid prices may weaken further. Smelters are facing a double dilemma of losses from ore processing and shrinking profits of by-products, and the expectation of maintenance is rising.

At present, the consumption transmission capacity of the copper rod industry is still acceptable. When copper prices adjusted in March, the cable sector had obvious stockpiling actions, and the operating rate of the cable industry was not high in the second quarter. After the finished product inventory is significantly digested, the industry operating rate will increase in the third quarter. However, considering the pre-placement of some raw material stockpiling, it is expected that the driving effect of the cable sector on copper demand in the second half of the year will be limited.

The air conditioning industry has a strong seasonal pattern of production and sales. The production and sales data of air conditioners may weaken further in the third quarter, until a new production cycle starts in the fourth quarter. Considering that the raw material inventory of the copper tube industry remains at a low level, and the inventory of finished copper tubes has been significantly reduced in the second quarter, the start of air conditioning production in the fourth quarter is expected to bring a relatively obvious consumption transmission effect.

According to data from the China Association of Automobile Manufacturers, the production and sales of new energy vehicles have performed quite well since the second quarter. The production and sales data of automobiles are expected to continue to strengthen in the second half of the year driven by new energy vehicles.

In summary, under the shift in the macro environment and the supporting role of supply, copper prices will maintain a fluctuating trend.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.