China's copper stocks decrease

Some institutions began to sing more than copper prices and believe that copper prices are expected to rebound in the future

Although companies continue to be cautious about the development of the market, the recent decline in copper inventories and the phased rebound in copper prices have made more and more brokers begin to re-emphasize the value of copper investment.

After Goldman Sachs took some of the metals represented by copper "overturned" on Tuesday, some domestic brokers began to sing more than copper this week. Among them, the decline in inventory is an important logic to see more.

Copper stocks in the three major exchanges decreased significantly

According to the data, copper stocks at the Shanghai Metal Exchange began to decline from the beginning of March after entering the consumer peak season. Since May, the sum of copper inventories in the three major exchanges of Shanghai Copper, LME, and COMEX also declined significantly, and the growth rate of LME inventory declined. CSC analysts believe that this shows that China's copper consumption is still strong, and the decline in inventory will play a supporting role for copper prices.

Although China's copper imports continued to decline in January-April, especially in April, refined copper imports fell sharply by 48%, but analysts believe that vigorous exploration of the previous period left room for the rebound of copper imports in the later period. With the combination of volume recovery and continued improvement in domestic demand, copper prices are expected to rebound in the coming period.

Shanghai copper began to oscillate upwards from mid-May and yesterday closed at 68,140 yuan/ton, which was more than 3% higher than the phased low of May 12.

Most companies are still cautious

However, companies are much more cautious. The pressure caused by the tight funding has always been lingering, leaving most companies out of optimism.

Shandong Penghui Copper Sales Manager explained in an interview with reporters yesterday that the recent decline in inventory stems from the previous repressed demand in a recent round of concentrated release. Coupled with the reduction of tax incentives, downstream companies have reduced the purchase of scrap copper and switched to electrolytic copper. As a result, inventory has dropped significantly. As a whole, there is no obvious change in supply and demand, and there are obvious differences in market opinions. However, most domestic large copper producers are not optimistic about price trends. "The price of copper is much higher than the cost line. It is difficult to say that the price of copper will rise in the current environment." He believes.

A large copper concentrate supply company who did not wish to be named also holds a similar view. He told reporters yesterday that the brokerage’s optimism “is probably to follow suit”. As far as the current situation is concerned, there is no clear sign of improvement in downstream consumption.

"On the supply side, the current copper price is enough to allow mining companies to start production at full capacity, and the major domestic copper smelting companies such as Jiangxi Copper and Tongling Nonferrous Metals Co., Ltd. are also not vulnerable to financial constraints. Therefore, the supply of copper products is generally adequate. We feel that there is no increase in downstream demand. The downstream companies of copper smelting are affected by the tightening policy and the order situation continues to be under pressure, he said.

However, he also mentioned that the downstream demand is still in view. “We also noticed that the exchanges, bonded areas, and social stocks are all declining, and that these stocks are not being moved but actually consumed. Explaining that demand may not be as bad as everyone thinks.”

China is the world’s largest copper consumer. Since the first quarter, "China demand" has not become an important reason for the decline in copper prices. Some people think that in the situation of supply and demand saws, the demand must accumulate to a certain extent and be boosted by funds. Only then can the base metals such as copper get out of the new wave.