Fundamentals are still strong Copper prices have limited room for short-term ups and downs

The elasticity of global copper mine supply is insufficient, and the risk of strikes remains
.

From the perspective of the copper mine production cycle, the peak of the world's major copper mine new projects ended in 2016, and the copper mine entered a new round of tightening cycle in 2017, and the production capacity increase in the next three years was limited
.
It is estimated that 1.
76 million tons of new copper mining capacity will be added globally from 2018 to 2020, of which only 604,000 tons will be added in 2018, so it is expected that the elasticity of copper mine supply growth in the future is insufficient
.
When TC soared above $90/ton in the third quarter, the source quotation in the fourth quarter also trended upward, and some traders' quotations were raised to around
$90/ton.
Market participants have entered a state of long-term single game, when miners will focus on smelting 19 years of production and the tightening logic of copper mines, refiners will rely on the current spot high TC and domestic environmental protection is becoming stricter, and the differences between the two sides of miners and refiners will be greater
.

Copper scrap imports are falling and taste is rising
.

Copper scrap is one of the main sources of electrolytic copper supply, and domestic recycled copper accounts for up to 20%
of electrolytic copper.
China's copper scrap is highly dependent on imports, but under policy constraints, scrap copper imports continue to decline, China's cumulative copper scrap imports from January to July were 1.
36 million tons, a cumulative decline of 36.
4%
year-on-year.
Although copper scrap imports fell sharply, import grades increased significantly, and copper scrap imports from January to July contained about 803,000 tons of copper, up 5.
9%
year-on-year.
From the historical data, China's Hong Kong, the United States and Australia are the most important sources of copper scrap imports, in 2017 China imported 535,000 tons of scrap copper from the United States, accounting for 15.
1% of the total imports, under the influence of Sino-US trade frictions, the amount of copper scrap imported from the United States in the later period or sharply reduced
.
In the long run, the management of scrap copper import policy continues to increase, and the short-term increase in copper content of scrap copper imports is not sustainable, and it is expected that the supply of scrap copper will continue to decrease
in the later period.

Inventory is falling back at a high level, focusing on the speed of
destocking.

In 2018, affected by the Spring Festival effect and consumption delays, the total inventory of the three major exchanges once reached 917,000 tons, an increase of nearly 200,000 tons over the same period last year, close to the highest level
of inventory in 2013.
In the second quarter, market consumption improved significantly, and electrolytic copper entered the destocking stage
.
In the third quarter, affected by the Sino-US trade war, the price difference between refined scrap narrowed, and some companies used refined copper instead of copper scrap, and inventories have fallen from a high level to the average level
of nearly five years.
At the same time, electrolytic copper inventory has obvious seasonal characteristics, after reaching the high point of the year in the first quarter, it will enter the stage of continuous destocking, so the inventory in the fourth quarter may continue to decline
.

Power grid investment is expected to accelerate, and new energy will become a growth point
.

From January to August 2018, the cumulative value of State Grid capital construction investment was 280.
3 billion yuan, a cumulative decrease of 13.
7% year-on-year, but through seasonal analysis, we found that the power grid investment has the characteristics of low and high, and the State Grid investment plan clarifies that the total planned investment of the power grid in 2018 is 498.
9 billion yuan, and the actual power grid investment of China State Grid in 2017 is 485.
36 billion yuan, which indicates that the power grid investment in 2018 is slightly higher than that in 2017, and it is expected that the power grid investment is expected to accelerate in the later period
。

Power grid investment is expected to accelerate, and new energy will become a growth point
.

Since the beginning of this year, the sustained high growth rate of real estate investment is the main reason for the improvement of the current industrial economy, the national real estate development investment of 7,651.
9 billion yuan, a year-on-year increase of 10.
1%, from the historical data, the data and copper prices to maintain high synchronization
.
In addition, the air conditioning industry accounts for about 15% of the terminal consumption of electrolytic copper, and the average need for electrolytic copper per air conditioner is 7.
2 kg, and the cumulative output of air conditioners from January to August 2018 was 141.
782 million units, an increase of 11.
1% year-on-year, continuing to maintain double-digit growth
under the influence of the high base in 2017.
From the perspective of the cycle, usually the production and sales of home appliances lag behind the real estate market for 1 year, and the current real estate market continues to maintain steady growth, and it is expected that the output growth rate will decline in the fourth quarter, but the overall stability will remain stable
.

At present, the domestic supply of copper concentrate is relatively sufficient, the growth rate of power grid investment is expected to increase, and the contradiction between supply and demand is not prominent
.
On the macro front, the downward pressure on the domestic economy still objectively exists, but the macroeconomy is expected to stabilize
under the government's policy of expanding infrastructure investment, large-scale tax cuts and cost reductions.
If the Sino-US trade war does not intensify during the year, and the macroeconomic operation at home and abroad is stable, copper prices are expected to return to above 52,000 yuan / ton; On the contrary, copper prices continue the bottom shock market, the main operating range is 47,000-51,000 yuan / ton, the US mid-term elections may become a key time node
.