In 2021, when China started its journey of "carbon peak and carbon neutral", the EU gradually raised its emission reduction target, and the US invested US $300 billion in new energy infrastructure, the demand for new energy has become an important factor in copper consumption. The construction of low-carbon power generation facilities based on wind power and photovoltaic power will enter a period of rapid growth, while the transformation of fuel-powered vehicles to electric vehicles at the energy consumption end will become the main development trend. The construction of energy infrastructure and the development of electric vehicles will promote the use of copper. It is estimated that from 2021 to 2023, the new energy sector will bring 92.7 million tons, 124.8 million tons and 1.576 million tons of global copper consumption each year, with a 3-year CAGR of 25.9%.
Overseas is leading the recovery in traditional demand. The economic recovery in overseas developed regions will maintain the current trend, which will continue to have a positive effect on the real estate market under the background of loosening the monetary and fiscal conditions. In the automobile market, the United States and Europe experienced a "V" shaped rebound, and the boom picked up. Real estate and auto industry support, overseas leading refined copper demand recovery. Domestically, the power and home appliance sectors will maintain high growth, while transportation and construction will maintain only a weak recovery. Combined with the new energy demand, it is estimated that domestic copper demand will increase by -1.13 million tons (-7.69%), + 438 million tons (+3.28%) and + 309 million tons (2.24%) each year from 2021 to 2023. However, the global refined copper consumption grew at a small rate of 1.68% in 2021, and maintained a growth rate of 3.96% and 2.55% in 2022-2023, respectively. The annual demand was 248.2.1 million tons, 258.0.3 million tons and 26,462 million tons, respectively, with a 3-year CAGR of 2.73%. (Note: In 2020, the national purchase, storage and inventory accumulation led to a substantial increase in apparent demand, and in 2021, the domestic demand showed a substantial decline after excluding the impact of purchase, storage and inventory.)
Copper loose and smelting tight, a small increase in supply. Resource supply: copper + scrap copper recovered in the same period. Resuming production, expansion and new production resonance, mine end supply into the boom period. During the epidemic period, the export of European and American countries and the dismantling activities of scrap copper in Southeast Asian countries such as Malaysia were limited. In 2021, when the epidemic is better, the use of scrap copper will return to the positive growth track. It is estimated that the combined supply of copper ore and scrap copper in 2021-2023 will be 21.55 million tons, 22.53 million tons and 23.46 million tons respectively. The growth of domestic smelting output is still the main driving force for the growth of global output. The peak of smelting production has passed, and smelting will enter a slow period of expansion from 2022. It is expected that the overall refined copper output will maintain a weak growth in the later period. The global refined copper output in 2021-2023 is 2504 million tons, 2541 million tons and 25.79 million tons respectively, with a 3-year CAGR of 1.8%.
Refined copper supply and demand, copper price center move up. The global balance of refined copper in 2021, 2022 and 2023 will be 21.9, -39.3 and -672,000 tons respectively. Overlay the epidemic later, economic recovery, the continuation of easy monetary policy, the copper price formation of the supporting effect. It is expected that the domestic copper price center will move up to 67000-78000 yuan/ton in the following 3 years, and the copper enterprises containing their own mines will fully benefit.
Industry rating. Global economy repair, macro background support copper prices. Both ends of refined copper supply and demand to maintain the recovery of prosperity, copper prices continue to be high. Give industry a "recommended" rating.
Focus on individual stocks. Zijin Mining: The world has more than 62 million tons of copper reserves, equivalent to half of China's total. Jiangxi Copper: the largest comprehensive copper production enterprise, with an annual output of more than 200,000 tons of copper concentrate. Luoyang molybdenum industry: leading resource production technology, cost reduction has the advantage, with Congo gold and Australia copper resources. Yunnan Copper: grasping external resources, internal cost reduction. Tongling Nonferrous Metals: Mirador copper mine resumed production, resource self-sufficiency rate increased.
Risk warning. Copper production accelerated, copper demand growth was less than expected, the performance of recommended companies did not reach expectations.
