On February 10, the Shanghai copper futures price hovered below 70,000 yuan/ton. In the past month, copper prices have always maintained this price shock, but the prices of energy commodities such as coal, natural gas, and oil continued to show a downward trend.
In the domestic market, the domestic LNG market continued to decline on December 7, falling below the 5,000 yuan mark, and the price of imported gas was also adjusted downward. In terms of crude oil, prices in the international and domestic markets entered a downward channel after mid-October and have so far fallen to the level of mid-September. The price of coal has experienced a rare decline in history since late October. Looking at the futures market alone, the price of thermal coal in the domestic market has fallen from nearly 2,000 yuan/ton in mid-October this year to less than 700 yuan/ton today.
At present, the new crown variant virus and the taper that is being implemented in the United States have failed to affect the market's optimism about the copper market. "At present, including variant viruses, the lethality of the epidemic on the bulk market is gradually weakening." On December 9, a person from a large domestic copper company told the Economic Observer.
The person analyzed that in the medium and long term, based on the global demand for copper, including carbon neutrality, energy revolution, etc., the supply and demand of copper will remain tight in the medium and long term, and the copper price in 2022 will likely return. Will set a historic high.
However, at the moment, the bearish side of the copper price is still there. Next week the Fed will have to decide whether it will announce a more aggressive Taper. Taking a stake in the United States has accelerated the process of Taper, which may mean that there will be a periodical low point during the year and early next year, and it will be a better time to buy at that time.
At present, domestic copper smelting raw materials mainly rely on imports. The person’s company is a large state-owned copper smelting company. As a result of 100% hedging, the company’s raw material procurement and product sales are not based on market conditions, but the high metal prices are bound to give domestic related industries The chain and even the entire manufacturing industry bring greater pressure. As the world's largest importer of bulk commodities, the rise in copper prices will also bring considerable challenges to China's economic management departments.
Hongye Futures analyzed on December 9 that domestically, it is unlikely that the central bank will release water again before the Spring Festival. It is expected that the domestic capital and policy will be stable from December to the first quarter of next year, and the domestic economy is likely to remain at the current situation. Potential stage. It is in the off-season, and copper fundamentals are not expected to fluctuate significantly. The epidemic situation in Europe and the United States rose again in November. The recently announced economic and employment data in the United States and Europe fell short of expectations. It is expected that the economic data in Europe and the United States will remain under pressure in December. Taking into account the current ample global energy supply and the sharp drop in crude oil prices, it is expected that the prices of other commodities such as non-ferrous metals will return to a more stable pattern. “Global macro fundamentals have returned to flat, and the market’s response to China’s central bank’s RRR cut and targeted interest rate cuts has also been flat. The northern hemisphere’s economy has slowed in the winter, and emerging market countries have been hit hard by the epidemic in the past two years. Their contribution to the global economy has fallen sharply. -6 months) The global macro fundamentals are relatively weak, and the spot demand on the supply and demand side forms a bottom support under the copper price. It is expected that the medium-term Shanghai copper will continue the current range of shocks. The upper pressure of Shanghai copper is 75,000 yuan/ton. The bottom support is 67,000 yuan/ton.” The agency said.
Although copper prices may face challenges in the short-term, domestic and international markets seem to be optimistic about the long-term future of copper.
Tianfeng Futures predicts that copper prices are expected to return to their 2021 highs in 2022. According to the analysis of the agency, the main line of the macro environment facing copper in 2022 is the acceleration of the Fed's Taper + interest rate hike and the tightening of the global liquidity margin. However, from the review of interest rate hikes in history, copper prices have never unilaterally dropped during interest rate hikes. The implication behind this is that there is no need to be pessimistic about copper prices in 2022.
Developed countries represented by the United States will intensify investment in fixed assets in the three aspects of real estate, infrastructure, and manufacturing, while the vigorous development of emerging fields represented by photovoltaics, wind power, and new energy will inject growth effects into copper; this makes copper The analysis framework of the company needs to be updated, or more road signs need to be established.
And the Chinese market does not seem to be pessimistic. Exports currently show no signs of a rapid decline, and may remain high in the first half of 22. At the same time, the signal of social financial bottoming is obvious and a credit pulse may be initiated. The policy of stabilizing growth will also be implemented. Gradually exerting force, this will form a phased support for copper prices.
From the perspective of copper fundamentals, the supply of copper mines has further recovered, and the growth rate is expected to be between 4-5% next year. In addition to the increase contributed by new expansion projects, the final supply will also depend on many factors this year due to the decline in grades and the epidemic. Whether the old mines whose output has fallen due to strikes and other factors can regain their growth next year, otherwise the copper concentrate market will remain relatively balanced next year, and there will be no obvious surplus.
The agency backtracked the eight interest rate hike cycles of the Federal Reserve since the 1970s, and used the CRB metal index to characterize copper prices. The results found that during the eight interest rate hikes, the copper price never fell unilaterally, and during certain interest rate hike cycles. Instead, it recorded a huge increase.
On the whole, the above institutions judged that the possibility of wide fluctuations in copper prices next year is greater. If the Fed’s Taper and interest rate hike paths are fully accelerated, the macro risk may be released in the first half of the year, and copper prices may experience a limited decline. The support is expected to be 59,000- 60000 yuan/ton, the second half of the year is more inclined to rebound; if the Fed is not in a hurry to accelerate, in the first half of the year, driven by factors such as maintaining high exports, rebounding credit pulses, and gradual efforts to stabilize growth policies, copper prices are expected to return to their highs in 2021. point.
The international market is also optimistic about the price of metals represented by copper. As early as October of this year, Citibank raised its long-term copper price expectation under basic conditions to $9,000/ton. Recently, analysts from Mizuho Securities (Mizuho Securities) said that after this year's full rebound, the prices of most base metals have remained high, and there will be more similar situations in the coming year.
This is based on the anticipation under the global carbon emission reduction action. The increase in metal demand may cause the value of metal production to soar by more than four times. The prices of copper, nickel, cobalt and lithium may be at an unprecedented and sustained net zero emissions. Under the trend, the total output value of 2021-2040 will increase by more than four times, and it will even be comparable to the crude oil production value. However, the analysis agency is cautious about investment in iron ore.
In addition, analysts of the agency mentioned that China’s demand will undergo a huge shift. The original driving force of China’s economic growth (6.440, 0.04, 0.63%)-industrial demand will decline, and the demand in the new economic field-consumption will Rising, changes in the Chinese economy will lead to a shift from steel, iron ore and coal to copper, nickel, aluminum and other "energy transition" metals.