January 2022 cable raw materials (copper) monthly report

First, the macro aspect

International aspect,

1.
Bank of America expects the Fed's first rate hike to occur in March, with 25 basis points
in each of the next eight quarters.
The bank now expects the Fed to announce a balance sheet reduction at its June meeting, with the risk
of bringing it forward to May.

2.
The International Monetary Fund (IMF) released an update to the World Economic Outlook Report on the 25th, predicting that the global economy will grow by 4.
4% in 2022, 0.
5 percentage points
lower than the forecast in October last year.

3.
The US Department of Commerce announced that in the fourth quarter of 2021, the preliminary annual growth rate of US gross domestic product (GDP) was 6.
9% month-on-month, and the economy grew by 5.
7% in 2021, the fastest growth rate
since 1984.

Domestically,

1.
Driven by the reduction of policy interest rates, the loan market quotation rate (LPR) will welcome another "interest rate cut", with the "double reduction" of the two varieties of LPR, individuals and enterprises will benefit from the reduction of interest expense costs, and social financing costs will continue to decline
.
The central bank frequently releases policy warmth, so that the market expects more easing measures in the near future, many market analysts believe that there is still a window and necessity for interest rate cuts in the next half year, and RRR cuts and structural monetary policy tools are also expected to continue to be launched
.

2.
According to the National Bureau of Statistics on January 17, in the fourth quarter of 2021, the national industrial capacity utilization rate was 77.
4%, down 0.
6 percentage points
from the same period last year.
In 2021, the national industrial capacity utilization rate was 77.
5%, an increase of 3.
0 percentage points
over the previous year.

3.
According to the National Bureau of Statistics on January 17, in December 2021, the added value of industries above designated size increased by 4.
3% year-on-year (the following growth rates of added value are the actual growth rate excluding price factors), an increase of 11.
9% over the same period in 2019, and an average growth of 5.
8%
in two years.
From a month-on-month perspective, in December, the added value of industries above designated size increased by 0.
42%
over the previous month.
In 2021, the added value of industries above designated size increased by 9.
6% over the previous year, and the average growth rate for two years was 6.
1%.

Second, the market review

In January, copper prices showed a wide range of fluctuations, rushing back down and falling repeatedly
.
As of the 28th, Shanghai copper main force closed, monthly review, global inflation data remained high, crude oil hit a seven-year high, with the surrounding metals rising linkage, copper prices twice tested 72,000; however, the Federal Reserve meeting hinted at accelerating the pace of interest rate hikes, liquidity tightening expectations are strong, suppressing market risk appetite, while the sudden geopolitical risks of Russia and Ukraine triggered a huge shock in the global financial market, and the Chinese and American stock markets fell sharply, and copper prices fell back under pressure
.

In terms of fundamentals, seasonal accumulation began at home and abroad, and the risk of picking up goods and crowding was basically lifted
.
At present, the macro aspect is loose and tight inside, the domestic epidemic control is prominent, and copper prices are still expected to remain high, but the Spring Festival period is mainly
hedging.

In terms of the market, the premium of good copper rose first and then fell in January, and due to the impact of the Spring Festival holiday, the premium before the holiday continued to decline, and good copper remained around
50 yuan.
In the first half of the month, the overall supply was still tight, and at the same time, the downstream buying pre-holiday replenishment, mostly below the 70,000 market entry price, once boosted the rise of more than 400 yuan
.
At the end of the month, it basically entered holiday mode, and few inquiries were made
.
In terms of import profit and loss, the hawkish tone of the Federal Reserve stimulated the dollar index to rise, the volatility of the foreign exchange market intensified, and the import profit window continued to close this month, and expanded to nearly 1,000 yuan per ton
at the end of the month.

3.
Waste market

In January, copper prices fell sharply, spot copper rose 650 yuan / ton compared with the end of last month, and scrap copper fell by about
600 yuan / ton.

At the beginning of the month, due to the epidemic factors, some copper factories in Hebei and Henan have successively stopped harvesting, and some copper factories in other regions have also successively issued holiday notices before the year, compared with previous years, this year because the tax policy has not yet been finalized, the holiday time of enterprises is significantly earlier
.
Overall, in the middle of this month, due to the recent high price level, traders are more motivated to ship, and shipments have increased
.
Coupled with the resurgence of the national epidemic, transportation to some areas is inconvenient, which has affected the stocking cycle of some traders and lengthened
it.
And near the end of the year, downstream consumption weakened, copper mills and medium and large traders in various places have undercut prices
.
Most copper factories mainly sort out pre-orders, and do not accept new orders
years ago.
The upstream and downstream enterprises of copper scrap across the country have begun to close down one after another, and due to concerns about the new fiscal and taxation policies, the replenishment desire of upstream and downstream enterprises this year is low, the price reduction situation is obvious, and the overall market trading atmosphere is relatively sluggish
.
Some of the large copper mills are still quoting, mainly after the holiday, and the account period is longer
.

In the last week before the holiday, the market basically entered holiday mode, and downstream inventory clearance also led to an increase in quotation gaps; Due to the influence of geopolitics, the decline expanded, further suppressing the willingness of cargo holders to
ship.
It is understood that copper mills and traders across the country have a holiday time concentrated near the 20th of this month, and more construction starts on the eighth day of the year
.

4.
Inventory

In 2021, the lowest domestic social treasury before the Spring Festival touched 68,500 tons, a record low in the past five years, and the social treasury in the first two weeks of the Spring Festival was 73,100 tons, and the bonded treasury was 177,000 tons, which was significantly lower than the 143,500 tons of the social treasury and 425,000 tons in the same period before the Spring Festival last year, a significant decrease of 70,400 tons and 248,000 tons, a decrease of 49.
06% and 58.
4%.

In the last week before the Spring Festival, the amount of social treasury storage was only 59,000 tons, and the amount of bonded treasury was only 12,000 tons, which shows that even if the amount of social treasury and bonded inventory increases significantly after the holiday, the social treasury and bonded inventory will still be at a low level
.

The market inventory after the Spring Festival is not outstanding, except for 2020; After the Spring Festival in previous years, the copper downstream consumer market will begin to recover rapidly in the second or third week after the holiday, and most enterprises will begin to increase the purchase volume and increase the raw material reserves of enterprises in the first week after the holiday, so that the inventory of the market after the holiday is not obvious, and after the Spring Festival in 2021, because the amount of social treasury and bonded treasury is at a low level, there may be a temporary shortage after the copper market, which has a certain support
for copper prices and premium discounts.

5.
Industry news

1.
The Kamoa-Kakula copper mine in the Democratic Republic of the Congo is a major project
of Zijin Mining to achieve leapfrog growth.
The construction of the 3.
8 million tons of ore processing plant in the second phase of the project is advancing rapidly, and it is expected to complete about 93% by the end of January, and enter the commissioning stage in April this year, and the overall progress is significantly earlier
than the original second quarter.
Based on 100% equity, the planned target for 2022 is to produce 290,000 to 340,000 tonnes of copper
.

2.
Chilean copper mine Antofagasta forecasts lower copper production this year as Chile's driest weather in years has adversely
affected copper mine operations.

3.
The net profit attributable to the parent of China's copper industry increased by 7.
8 times compared with 2018, and the production and operation profit increased by 2.
8 times compared with 2018, the best level in history, achieving a "three-consecutive reduction" in the number of enterprises with complete cost and loss, and financing costs, and making new breakthroughs
in four aspects: industrial development, deepening reform, scientific and technological innovation, and solving historical burdens.

4.
Aurubis, Europe's largest copper producer, released an earnings forecast of 85% in the fourth quarter and raised its full-year earnings forecast, helped by strong demand and high copper prices
.

The U.
S.
Department of the Interior canceled two mineral leases for Antofagasta Plc's proposed Twin Metals copper-nickel mine in Minnesota, effectively killing the project and handing a major victory to environmentalists
.
The decision shows that despite the increased demand for minerals used to make electric vehicles in efforts to combat climate change, the Biden administration is increasingly willing to prioritize domestic conservation efforts
.
In 2016, then-President Barack Obama's administration first canceled leases for a proposed mine in northern Minnesota
.
But President Donald Trump's administration reversed that decision
.

6.
A few days ago, Rio Tinto Group announced its production results
for the fourth quarter of 2021.
Statistics show that the company's bauxite, electrolytic aluminum and mineral copper output in the fourth quarter of last year was 54.
3 million tons, 3.
2 million tons and 494,000 tons
respectively.