Fundamentals marginal improvement of Shanghai copper weak season is not light

The recent nonferrous plate trend is very strong, Shanghai aluminum, Shanghai zinc, Shanghai copper have broken through upward, forming plate resonance.The dollar continued to weaken, adding to positive domestic economic data, boosting bullish sentiment.Of course, the marginal improvement in fundamentals also supports prices, allowing the effectiveness of the breakthrough to be confirmed.So even in the off-season, copper prices are still expected to get out of the band.

Macro emotions fuel an upward breakthrough

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With the Fed's monetary easing already at a record high and its longitudinal comparison far outpacing that of other countries, the medium-term trend of dollar weakness is hard to reverse.In addition, the second outbreak poses new challenges.

Domestic epidemic control has achieved a key victory, the economy is recovering steadily, various economic data have been significantly improved, and the Resilience of the Chinese economy has become prominent.In October, China's industrial output increased by 6.9% year on year and is expected to increase by 6.5%. With China's accession to the RECP organization, copper and its products are among industries with export growth of more than 20%. The positive data ignited bullish sentiment.

Supply is relatively tight

In the case of copper concentrate, the President of Chile decided on 11 September to extend the state of emergency law in force since 18 March for a further 90 days from 15 September.At present, the impact on production is still relatively limited, but the potential threat to transportation and so on is still there.And as copper prices have rebounded and the impact of the outbreak has worsened, Chile has had a series of mine strikes since the end of the third quarter.Although production is resuming steadily on the Peruvian side, it is understood that, until now, its transport links have been greatly affected.

The shortage of supply has put pressure on the crude smelting cost of Copper in China. The latest TC fell to us $48.1 / ton, which is the lowest in nearly five years, and the risk of further reduction is still in the future.

Keeping low

In terms of real estate, in October, the growth rate of newly started area still turned from negative to positive, and the growth rate of completed area also increased simultaneously, which is a more positive change compared with September.Driven by the sales of real estate, home appliances increase in production is good.And automobile production and sale situation is more recovery obvious.The latest figures show car production in October was 2.481 million units, up 11.1 percent from a year earlier.

In terms of inventory, as of November 20, the cathode copper inventory in Shanghai Futures Exchange was 232,091 tons, which has not recovered since July 17.LME copper stocks stood at 156,075 tonnes as of November 23, unchanged from early October.Total domestic inventories remained low, although Shanghai's FTZ stocks rose about 227,000 tonnes from their low level of 434,000 tonnes.Foreign copper stocks were stable, but net exports declined under the second outbreak, and the momentum of substantial destocking slowed down.Low inventories indicate a weak consumer season.

In general, macro sentiment played a role in the rise of copper prices, coupled with the impact of the rebound of the epidemic abroad on transportation, and TC perennial low shows tight supply, low demand in the off-season, especially the real estate and automotive data further improved.Copper has technically broken out of a four-month oscillating consolidation range and is expected to see a new wave of rally. It is advisable to be long and stop losses below highs.