Copper market bullish factors are limited, and the market action will be weakened in the future

The global supply of copper concentrate is tight, the current copper mine energy cycle is in a sluggish state, and the aging of existing mines has appeared
.
ICSG expects copper mine supply to grow just 0.
2% to 20.
64 million mt
in 2019.
According to the results of copper mine projects in 2019-2022, the new projects will be put into operation in 2022, before which the global copper mine growth rate remains within 2%, and there will be a trough
of capacity increment in the next two years.

Copper production from Chile's state-run copper company Codelco fell 12.
1 percent from a year earlier to 769,400 tonnes
in the first half of this year.
BHP's Escondida copper mine, the world's largest copper mine, also fell 12% in the first half of the year from a year earlier to 569,900 tonnes
.

The continued tight supply of copper mines is also confirmed by copper concentrate TC fees, which continue the downward trend
.
Under the interference of frequent news at the mine end, the current market supply shortage has not been completely alleviated, and copper concentrate production is expected to stabilize
by the end of the third quarter.
As far as domestic copper supply is concerned, China's copper smelter projects have been put into intensive use in the past two years, and the output is expected to be 9.
5 million tons in 2019, with a growth rate of 8.
6%.

China's refined copper production in June increased by 11.
8% from the same period last year to 804,000 tons, the highest
since December 2018.
The output from January to June was 4.
524 million tons, a cumulative increase of 5.
8%.

From the perspective of enterprise scheduling and maintenance, it is expected that domestic electrolytic copper production will continue to grow
in July.
At present, although smelters are losing money, production cuts are not expected to be strong
.
However, because the smelter has a long profit guarantee for copper concentrate, and the bank loan requires the smelter to produce continuously, the smelter has not yet taken the initiative to reduce production or overhaul, but the low processing fee is also difficult to make the enterprise have full production enthusiasm
.
Power grid investment needs follow-up efforts From January to June, the cumulative value of power grid capital construction investment was 164.
4 billion yuan, a cumulative decrease of 19.
3%
year-on-year.

Generally speaking, the completion of power grid investment in the first half of the year is basically about half of the second half of the year, and the projects in hand in the second half of the year are expected to accelerate, and the annual demand for grid copper needs to wait for the verification
of counter-cyclical adjustment in the second half of the year.
In the later stage, it will focus on the continuous promotion
of infrastructure construction by the improvement of local government financing conditions.
Automotive industry remains sluggish Domestic vehicle production in June was 1.
895 million units, up 2.
5% m/m and down 17.
3% y/y.
Sales were 2.
056 million units, up 7.
5% m/m and down 9.
6%
y/y.
The overall year-on-year decline in the automotive industry has narrowed, but production and sales are still under greater pressure
.
In terms of the air conditioning market, compared with previous years, the average climate temperature across the country this summer is lower and the rain is sufficient, on the one hand, the northeast air conditioning market, which was hot last year due to high temperature weather, has cooled down this year; On the other hand, the markets in South China, East China, Central China, Southwest China and other places that are highly anticipated by air conditioning manufacturers have not ushered in sustained and large-scale high temperature and hot weather
.

Looking forward to the second half of the year, while the base of air conditioners from July to September last year was low, the cool summer this year limited the sales of air conditioners in July and August, and the overall sales of air conditioners in the third quarter remained cautious
.
At present, domestic economic growth remains resilient, but the external environment is uncertain, and it is necessary to beware of the adverse effects
of factors such as the slump in the global manufacturing PMI index and the trade gap between China and the United States.
The supply and demand side of the copper market is in a tight balance
.
Supply side: Global copper market inventories are still at historically low levels, which supports copper prices to some extent, and the decline in copper concentrate processing fees limits the growth of
refined copper supply.
Demand side: PMI of copper downstream industries in July was below the boom and bust line, and it is expected to continue to decline
month-on-month in August.
At present, the terminal is still in the consumption off-season market, while new orders in the transportation, home appliances, and power industries weaken, construction starts have also slowed down
due to the impact of high temperatures.
In general, the current market bullish factors are limited, it is expected that the Shanghai copper market momentum will weaken, pay attention to whether the futures price can stand firm at the 47,000 yuan / ton mark
.