According to the data, by the end of 2021, the utilization rate of fine copper rod enterprises decreased by 4.38 percentage points to 62.7%. Near the Spring Festival, the downstream demand is weak, fine copper rod enterprises weekly operating rate fell four consecutive times. Copper's downstream PMI fell slightly in December and is expected to expand in January. In terms of terminal demand, there are no new developments in power grid investment for the time being, and copper consumption, which accounts for the largest proportion, remains relatively stable. Air conditioning production is in the off-season, with key air conditioning enterprises' production plans up 8.7 per cent month-on-month to 13.77 million units in January, with exports doing relatively well. Photovoltaic and wind power propulsion speed slightly slowed. In terms of new energy vehicles, the subsidy for new energy will drop by 30% in 2022, and the subsidy scale will be completely lifted from the upper limit of 2 million units. In view of the early rapid growth momentum and rising acceptance of residents, it is expected that the growth rate of production and sales can be maintained.
Copper concentrate supply is gradually easing
Recently, the CSPT team finalized the purchase guide price for spot copper concentrate in the first quarter of 2022 at us $70 / ton, an increase from the fourth quarter of 2021. Previously, China Nonferrous Metals Group and Jiangxi Copper agreed to import crude copper RC CIF 2022 at $155 / ton, which is further increased from $145 / ton in 2021. Recently, the negotiation results of processing fees in 2022 as a whole and in the first quarter have rebounded from the previous stage, reflecting the prospect of loose supply at the mine end. In November 2021, China imported 2.1876 million tons of copper ore and ore concentrate, up 22% month-on-month and 19% year-on-year.
Fine copper supply growth concerns inventory changes
In November 2021, China's output of electrolytic copper was 877,000 tons, up 0.2% year on year. Smelters have year-end impulse demand in December, electrolytic copper output has increased.
From the perspective of inventory data, by the end of 2021, copper stocks in the previous period increased by 11011 tons to 38,182 tons, while futures stocks increased by 324 tons to 6980 tons. LME copper inventories edged down 325 tonnes to 88,950 tonnes, while spot premium for 3-month copper remained around 30 yuan, indicating a low overall inventory level. Although inventory data provide some support, the effect of this factor has been a long time, and the first quarter is the traditional period of inventory depletion, so we should pay attention to future inventory changes.
Macro level is balanced but risks remain
From the macro environment, on the one hand, the omicron strain is spreading rapidly overseas, and the number of new cases in the United States has increased by more than 1 million a day. It can be seen that the impact of the epidemic will continue for some time. At the same time, the disease rate is not high, so there is no further information blockade for the time being, and the impact is relatively limited. On the other hand, the End of the easing policy by the Federal Reserve will be gradually implemented, liquidity tightening will be realized, and the pressure factor has not disappeared, which may become the power to overwhelm the market sentiment at any time. The January interest rate meeting will be held at the end of the month. In the short term, there will be no new trend, the negative performance is not prominent, and the long and short forces tend to be balanced. In terms of domestic economic data, both the official manufacturing PMI and Caixin manufacturing PMI picked up in December last year. The positive aspect is mainly reflected in that the new order index continued to pick up and the reserve inventory of enterprises began to increase after the reduction of raw material prices. Various measures to stabilize growth will help restore market confidence.
Overall, the recent macro level of long and short basic tend to balance, copper and refined copper are in the process of recovery, before the Spring Festival demand is weak, although inventory is still low but not a new variable, copper prices do not have the basis for a sharp rise.
