Tight spot circulation may limit the decline in copper prices in the short term

Last week, Shanghai copper highs retreated
.
The weekly average settlement price of the current month contract was 62944 yuan / ton, down 328 yuan / ton per day; The average price of the previous week was 64110 yuan / ton, down 1166 yuan / ton from the previous month, a cumulative decline of 1.
82%.

In terms of the external market, Lun copper is strong after
the high level.
The average price of LME copper in the first four trading days was 7469.
75 US dollars / ton, up 0.
5 US dollars / ton per day; Last week's average price was 7589.
25 US dollars / ton, down 119.
5 US dollars / ton from the previous month, a cumulative decline of 1.
57%.

In terms of spot, the rise in spot premiums inhibits downstream consumption, and with the influence of poor purchasing sentiment in the downstream, the market trade atmosphere is sluggish, and the real price transaction is weak to win
.

On the supply side, the supervisory board of Chilean mining company Antofagasta's Los Pelambres copper mine reached a new contractual agreement with the company, avoiding the risk of
a strike.
However, the production of major copper mines in Chile and Peru has been continuously reduced, and smelters are at risk
of disruption under the influence of the European energy crisis.
Under the background of reduced interference at the domestic mine end and loose supply of copper concentrate, the production enthusiasm of most smelters has increased, and the production of electrolytic copper in October is expected
to increase.
When the import window opens, imported copper will gradually flow in, which may promote a gradual increase
in inventories.
However, the supply of crude copper is tight, the domestic supply increment is very limited, and it faces greater uncertainty, the superimposed bonded inventory level is low, the import adjustment space is limited, and the spot circulation remains tight
.

On the demand side, the domestic power grid and infrastructure continued to accelerate in the fourth quarter, automobile production and sales were stable, especially the new energy vehicle purchase tax exemption policy continued to be implemented until the end of 2023, which will continue to stimulate the consumption
of copper for new energy vehicles.
Domestic sales of new energy vehicles in September were 708,000 units, a year-on-year increase of 99%.

However, the real estate gold is insufficient, home appliances are dragged down, and the copper pipe operating rate is less than expected
.
As the traditional peak season of Silver Ten draws to an end, the peak season is very poor compared with previous years, so the market trading performance is relatively cold, some copper rod factories began to shut down, in a wait-and-see state, demand recovery is far less than expected
.

In terms of inventory, Shanghai copper stocks continued to rise, with a cumulative increase of 25,820 tons to 89,566 tons, an increase of 77.
57%
from the previous month.
The highest level since July, but still 167951 tonne
below its peak in March last year.
Abroad, copper stocks fell during the week, with a cumulative decrease of 8,325 tons to 137325 tons, a decrease of 5.
72%.

Overall, copper prices are back to fundamentals
.
Domestic Shanghai copper fundamentals are healthy, although copper production is expected to increase, but the amount released is limited, and spot circulation remains tight, the focus is still on low inventories and high premiums
.
In addition, the domestic photovoltaic industry, power grid, infrastructure accelerated and new energy vehicle production and sales data are eye-catching, which greatly stimulates copper consumption, thereby strongly supporting
copper prices.
Moreover, there are good signs of domestic expectations for epidemic prevention policies, supporting the rise in prices
.
At present, spot copper premium is strong, the market maintains a tight pattern, and the short-term may limit the price decline space
.