1、 Trend analysis
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As shown in the figure above, copper prices have been falling in a weak trend for the past month. After hitting the bottom on March 16, there is a trend of stopping the decline and rebounding. As of the 21st, the spot price quoted was 67628.33 yuan/ton, up 0.58% from the low point on March 16 and down 8.02% year-on-year.
The US dollar index continues to decline and macro risks weaken
Goldman Sachs expects the Federal Reserve not to raise interest rates this week. Swap contracts bet that the Federal Reserve will cut interest rates by more than 3% next year, and the dollar index has continued to decline. Due to the banking crisis, the market previously swung back and forth between raising interest rates by 25BP in March and not raising interest rates. However, with the help of relevant regulatory agencies and Wall Street, it is expected that the impact of the European and American banking crisis and the interest rate meeting of the European and American central banks on the macro level is approaching the end, and the macro risk is reduced.
Disturbance in copper concentrate supply decreases and supply tends to loosen
The copper mine disturbance incident in February has been alleviated, Peru’s copper mine has fully resumed production, and Grasberg copper mine and Panama’s Cobre Panama copper mine also resumed production in early March. The loose supply of copper mines remains the main theme. In February, the operating rate of China’s copper smelters was 84.87%. Although there are 3 smelters with maintenance plans in March, due to the sufficient supply of cold materials, it is expected that there will be no impact on refined copper production. In March, the operating rate of the smelters will further increase, and the domestic refined copper production will continue to grow.
End-use consumption continues to recover and downstream bargain-hunting procurement increases
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Demand has entered the traditional consumption peak season, and copper downstream construction is generally expected to pick up. In February, the construction rates of enameled wire, copper pipe, copper strip, and refined copper rod were 69.81%, 68.33%, 74.17%, and 61.23%, respectively. It is expected that the month-on-month (MoM) recovery in March will be achieved. In addition, the focus of copper prices has recently fallen, and downstream bargain-hunting procurement has increased raw material inventory.
LME inventory is low
According to the historical price comparison chart of copper from the Business Society, there has been no significant seasonal peak season for copper in the past three years and March. Except for the upward trend in 2021, copper has been declining in other years.
Overall, copper fundamentals have shown a pattern of double prosperity in supply and demand, with copper concentrate supply disrupting and decreasing, and domestic electrolytic copper production increasing. However, in April, some large-scale smelting enterprises were overhauled, affecting the future supply of refined copper. Terminal consumption continues to recover, copper downstream construction is generally expected to rebound, and companies are seeking bargains to increase raw material inventory. Copper inventory warehouse receipts were low and supported. Currently, the macro risk is weakened, and it is expected that the copper price may stop falling and recover, ushering in a small upward recovery market.
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