SunSirs: Copper Prices Fell in Shock This Week (March 6-10)

Price trend

As shown in the figure above, the copper price fluctuated and fell this week. As of the end of this week, the spot copper price was 69,021.67 RMB/ton, down 0.38% from the price of 69,285 RMB/ton at the beginning of the week, and down 4.14% year on year.

According to the monitoring data of SunSirs, the copper price had risen for 7 weeks and fallen for 4 weeks in the past three months. There was a slight correction after the recent slight rebound in the copper price.

Analysis review

Macroscopic aspect: In his testimony to Congress this week, Jerome Powell, the chairman of the Federal Reserve, said that the Federal Reserve might speed up the pace of interest rate increase and raise the interest rate to a higher level than previously expected, which increased people's concerns about economic activity and global industrial metal demand. China's CPI fell in February, with a year-on-year increase of 1%, 1.1 percentage points lower than the previous month, and 0.5% lower than the previous month; The production recovery of industrial enterprises accelerated, the market demand improved, and the PPI was flat on a month-on-month basis, with a year-on-year decrease of 1.4%. The year-on-year decrease was 0.6 percentage points higher than that of the previous month.

Supply side: China's refined copper output in February was 907,800 tons, up 6.5% year-on-year, slightly higher than the expected 900,000 tons. The electrolytic copper output in March may continue to exceed expectations, and the interference at the South American mining end was slightly slow. Many long-awaited projects will reach production in 2023-2024, including those in Peru, Chile, Central Africa and Mongolia. It is estimated that by the end of 2024, the copper supply will increase by about 12% from that of 2021. Not only will the supply of primary copper ore increase, but also the supply of scrap copper is expected to increase.

emand side: the operating rate of refined copper rod was 62.1%, up 3.5 percentage points this week; The operating rate of renewable copper rods was 58.52%, down 1.8 percentage points this week. The price difference of refined waste was around 1,700 RMB/ton, and the substitution of recycled copper for refined copper consumption was enhanced. In terms of terminals, processing and downstream enterprises gradually resumed production, and orders for wires and cables and enameled wires increased.

Market outlook

To sum up, in the short term, the macro market suppresses the copper price, and the supply has increased. However, the domestic market has entered the seasonal consumption peak season, and the demand is expected to increase. With both supply and demand increasing, copper prices are expected to remain high and volatile in the short term.

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