August 2019 cable raw materials (copper) monthly report

First, the macro aspect

Domestically,

1.
On August 23, the Tariff Commission of the State Council of China announced tariffs on US goods, producing 5,078 tariff lines and about US$75 billion worth of goods in the United States, and imposing tariffs ranging from 5% to 10% on September 1 and December 15 in two batches
.

2.
On August 17, the central bank issued a new announcement, announcing that the interest rate will be "two tracks and one track", and decided to reform and improve the loan market quotation rate (LPR) formation mechanism, which will be implemented
from August 20.
The policy is favorable to the development of real enterprises, and the stock market has been boosted
.

3.
On August 12, China's social financing scale increased by 1.
01 trillion yuan in July, and it was expected to be 1.
625 billion yuan, compared with 2.
26 trillion yuan
in the previous month.
On August 14, China's industrial added value in July increased by 4.
8% year-on-year, compared with 6% expected and 6.
3%
in the previous month.
China's urban fixed asset investment from January to July was 5.
7% y/y, 5.
8% in the previous month and 5.
8%
expected.

International aspect,

1.
At 2 a.
m.
Beijing time on August 1, the Fed announced a 25 basis point interest rate cut, which was the first Fed to cut interest rates since the 2008 financial crisis
.
The rate cut is less than the 50 basis points
previously publicly called for by President Trump.

2.
On August 22, the preliminary value of the Markit manufacturing PMI in the United States in August was actually released at 49.
9, 50.
5 expected, and 50.
4
in the previous month.
This is the first time since September 2009 that the data has fallen below
50.

3.
Data released by the Federal Reserve on August 15 showed that US industrial production fell by 0.
2% in July, contrary to the growth trend expected by the market
.
Manufacturing output fell 0.
4 percent, down more than 1.
5 percent
since December 2018.
Relevant data released earlier showed that in the first half of this year, US industrial output and manufacturing output fell for two consecutive quarters and have fallen into a "technical recession"
.
The July data also showed no signs of
a rapid recovery.

Second, the market review

Global trade frictions have heated up this month, and market risk aversion is high
.
At the beginning of the month, the Fed cut interest rates as scheduled, and the dollar did not fall but hit a two-year high; At the same time, Trump's "Twitter governance" said that from September 1 this year, a 10% tariff will be imposed on $300 billion of goods imported from China, and the macro pressure copper price fell to near
the previous low.
Due to the expansion of external risks, the market adjusted the RMB "broke 7" and the onshore exchange rate remained around 7.
10, providing support for domestic metal prices, copper prices are strong inside and weak outside, accompanied by high-level calls between China and the United States, easing market pessimism, copper prices once rebounded to around
47,000.
At the end of the month, the tariff war escalated again, copper prices continued to test the bottom support strength, and the market's expectations for copper prices to build a bottom gradually increased
.

In terms of the market, copper prices have repeatedly bottomed out this month, and holders have maintained a strong price, and good copper premium has remained around 100 yuan / ton
.
The market trading is more cautious, and the downstream bargain stock is generally
in the off-season.
The wet supply in the spot market has decreased significantly, and the quotation is basically about 30 yuan
.
The transaction is mainly between traders, the price reduction space is generally not large, the market activity at the end of the month declined, although the price difference between 1909 and 1910 contracts gradually widened, but the gap between the current month's ticket and the next month's ticket quotation is about
20 yuan.
It is expected that as the market stabilizes and imports are replenished, it is difficult to raise the premium next month
.

This month's import profit window is open most of the time, basically remaining within
200 yuan.
The main reason is still the intensification of trade disputes, the sharp depreciation of the RMB exchange rate, when the "break 7" on August 5, the import profit can be as high as 430 yuan / ton, copper prices are strong inside and weak, and the profit window for imported copper continues to open
.
It is expected that there will be a major reversal in the short term, and the opening of the import window will continue
.

3.
Waste market

In August, copper prices performed a low range shock trend
.
The main force of Shanghai copper mainly runs around 46000-46600 yuan / ton, and the mainstream price of bright copper in the market is 42800-43200 yuan / ton
.
The overall price difference of refined waste has not changed much, so far at about 1300 yuan, but it is still in a narrowing range, and the market consumption has a strong demand for refined copper, thereby weakening the enthusiasm of
scrap copper trading.

The overall atmosphere of the scrap copper market has not improved significantly, the weak rebound of copper prices has led to scrap copper holders waiting and waiting for sales, and the shortage of market supply continues, but some traders are bullish on the market and begin to stock up on signs, downstream copper manufacturers are due to the demand off-season, orders continue to decrease and finished product sales are poor, production is limited, coupled with environmental protection storms continue to hit, some small businesses have plans to suspend or stop production and close.
Therefore, the enthusiasm of manufacturers to enter the market to find goods is weakened, and the market quality source is even more difficult to find, generally cautious or on-demand procurement, it can be seen that the market presents a situation of supply and demand, and the overall market transaction is not much
.

4.
Trend forecast

In August, copper prices maintained a volatile trend as a whole, and the price fluctuations throughout the month were small, among which positive and bearish factors had less information, macro positive factors had not yet been released and the fundamental consumption off-season effect hedged each other, copper prices tested the annual low again under the influence of the news, and the support effect was more obvious
.
With the gradual release of international macro benefits such as the Fed's interest rate cut and domestic economic stimulus policies, the consumption of refined copper produced by gold nine silver ten may exert certain pressure on the supply side, forming a medium-term favorable space
.
However, in the short term, if the overall stimulus and consumption environment do not actually produce a trend, copper prices may be dominated
by strong volatility.

5.
Industry news

Mopani Copper Mines, Glencore's Zambia-based subsidiary, said it had closed two shafts at its Nkana copper mine, which an opposition leader said would put 1,400 workers out of work
.
Earlier, Glencore said it would suspend production
of Mutanda, the world's largest cobalt mine (in the Democratic Republic of Congo), from the end of 2019.

2.
Codelco, the world's leading copper producer, said it had closed its Ventanas smelter along Chile's central coast for overhaul
.
Codelco said in a brief statement that the shutdown began on Monday, but it did not say when it would be closed or how it would affect
production.

Chile's state-run copper company Codelco's copper production in the first half of this year fell 12.
1 percent from a year earlier to 769,400 tonnes
, according to Chile's National Copper Commission (Cochilco).
Production at BHP's Escondida copper mine, the world's largest copper mine, also fell 12 percent to 569,900 tonnes
in the first half of the year from a year earlier, Cochilco said.
Chile's copper production in June fell 3.
6% month-on-month and 0.
9% year-on-year to 474,740 mt
, affected by a two-week strike action at the Chuquicamata copper mine owned by Codelco, official Chilean government data showed.

4.
In the first six months of 2019, Chile's copper production was 2.
785 million tons, down 2.
7%
year-on-year.
So in July, the Chile Copper Commission forecast copper production of 5.
83 million tonnes this year, on par with the record level in 2018, but had previously expected nearly 6 million tonnes
.

5.
On August 14 (local time), Codelco in Chile officially started underground operations
at its century-old Chuquicamata copper mine.
The US$5.
5 billion project has 1.
028 billion tonnes of copper reserves and is expected to produce 320,000 tonnes of copper annually by 2026, after the open-pit mine closed
in 2020.