Downstream demand stability copper price correction space is limited

With the further recovery of the global economy, the copper price continues to adjust the space is limited, it is expected that the copper price in April around 63,000 ~ 65,000 yuan/ton will be strongly supported, and the probability of further rebound is large.

Since the first quarter, domestic and foreign copper prices have hit 10-year highs driven by macro factors, with London copper hitting a high of $9,700 / ton and Shanghai copper surging above 70,000 / ton.However, the high price inhibits the downstream terminal consumption, and the superimposed scrap copper has obvious advantage in replacing electric copper. The orders of downstream processing enterprises decline. The copper market in the first quarter shows the characteristics of low peak season, and the copper price has maintained a shock consolidation for more than a month.Looking forward to the second quarter, in the context of the global economy to maintain a stable recovery, the Federal Reserve's monetary policy has not yet turned, commodity market risk appetite will not change, coupled with the domestic downstream enterprises to delay consumption, the industrial end of the positive copper price to provide marginal support, copper price is expected to correction space is limited, the probability of strong shocks in the late run is large.

The global economy is recovering further

The global manufacturing sector is growing faster and the economic recovery is gaining momentum.According to the China Federation of Logistics and Purchasing, the purchasing managers' index for the global manufacturing sector was 57.8 percent in March, up 2.2 percent month-on-month and remaining above 50 percent for nine consecutive months.Among them, the easing of the US epidemic and the implementation of fiscal stimulus policies accelerated the US economic growth. ISM manufacturing PMI recorded 64.7% in March, surpassing the market expectation of 61.3%, up 3.9% from the previous month and hitting a new high since 1984.

The IMF recently raised its forecast for global economic growth again, predicting that global GDP would grow by 6% in 2021 and 4.4% in 2022 respectively, the fastest growth rate ever seen.The IMF expects China's GDP to grow by 8.4% this year and 5.6% next year, and its forecast for 2021 is 0.3% higher than that at the beginning of the year.U.S. GDP is expected to grow 6.4% this year, compared with a previous forecast of 5.1%.Overall, the easing of the global epidemic has spurred further economic recovery.

Commodity risk appetite will not cool

The newly released minutes of the Fed's March meeting showed that all officials agreed that the stance of monetary policy remained appropriate for the time being to promote further economic recovery, and said there was no need for frequent changes to the forward guidance on monetary policy.In addition, Fed Chairman Colin Powell has said repeatedly in recent days that the central bank will not raise the benchmark federal funds rate until the U.S. economy is solid and maximum employment and inflation exceed its 2% target in the near term.At present, the huge debt burden of the United States has limited the space for monetary policy tightening. According to the latest data, the total federal debt of the United States has reached an unprecedented $28.04 trillion. Combined with the implementation of a new round of $1.9 trillion stimulus policies, the balance sheet of the United States has further deteriorated.

As a result, there is a high probability that the Fed will find a balance between Treasury yields and monetary policy, with no further upward momentum in nominal interest rates to be seen.In short, in the short-term Fed monetary policy will not change the background, the commodity market risk appetite will not cool.

The desire of the enterprise to fill the warehouse is strong

Data showed that the operating rate of wire and cable enterprises was 75.58% in March, up 33.67% month-on-month and down 8.48% year-on-year.In April, the consumption end showed signs of warming up. In addition to the gradual increase of power grid delivery, power grid companies around the country have issued bidding documents in succession recently, and the operating rate of wire and cable continues to improve.It is estimated that the operating rate of wire and cable enterprises in April was 86.31%, up 10.73% month-on-month and down 1.5% year-on-year.In addition, the enameled wire operating rate was 84.31% in March, up 6.91% year-on-year and 29.01% month-on-month, which is expected to remain stable in April.At the same time, copper pipe consumption in April is expected to continue to grow, according to industry feedback, because the year before the prevention of repeated epidemic, some terminal air conditioning enterprises to adjust the production plan, resulting in copper pipe consumption delay.Since March, the new orders of most copper pipe enterprises have been concentrated and the production schedule is full, and most of them have recovered to the normal level in previous years. Some enterprises even feedback that the supply of recent orders is short of demand.

Bulls cut positions on rallies

From the point of view of domestic positions, with the high oscillation of copper price, the total holding of copper dropped from 770,000 to 700,000, indicating that the early long funds reduced positions and stopped profits, did not trigger short admission, and the copper price correction will stimulate the industry capital admission lock costs.At the same time, as of March 30, CFTC non-commercial net long positions were 43,867, down from 66,017 at the beginning of March 22,150, copper market speculative funds on the gains, the market short momentum is not strong.

To sum up, the short-term copper under no further bad on further price callback space is limited, and with the global macro stabilization, downstream existing inventory forecast, is expected to April of copper in 63000 ~ 65000 yuan/ton, near it will have strong support, and further rebound probability is bigger, the downstream enterprises can consider to buy the dips a little lock cost.