Supply and demand are tightly balanced and copper prices are in a dilemma in September

I. Trend analysis


According to the monitoring data of business associations, as shown in the chart above, the narrow fluctuation of copper price in September was the main factor. At the beginning of the month, the price of copper was 46736.67 yuan/ton. At the end of the month, the price of copper rose sharply to 47286.67 yuan/ton, with an overall increase of 1.18%, a decrease of 1.81% from the beginning of the year and a decrease of 5.94% from the previous year.

II. Market Analysis

Copper prices in September, mainly affected by macroeconomic pressures and trade frictions, continued to bear pressure, but supply continued to be tight, leading to a dilemma between copper prices.

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Supply: During the period of 2018-2019, domestic copper enterprises increased production capacity by nearly 2.47 million tons, and put into operation exceeded expectations, which led to a rebound of supply pressure in the copper market; however, in 2019, when copper enterprises overhauled, the output of copper enterprises in the first half of this year was significantly lower than expected. From January to July 2019, domestic copper refining output totaled 5.713 million tons, down 2.3% from last year. The output showed a downward trend, and since June, copper production began to rise slowly.

Demand side:

Power grid: The investment performance of power grid in the first half of the year was not good, but it improved significantly in July. The cumulative annual growth rate increased from 19.3% in June to 13.9% in July. The potential of power generation in the latter half of the year is great, and the investment scale of power grid in the fourth quarter is expected to increase.

Real estate: In August, the cumulative investment in real estate development fell to 10.5% from 10.6% of the previous value, and the growth rate of real estate investment fell for four consecutive months. However, the growth rate of completed housing area increased from July-11.3% to-10%, and the decline was narrowed.

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Air-conditioning: In August, air-conditioning sales per month were 10.274 million units, an increase of 3.5% compared with the same period last year. Among them, domestic sales were 7.291 million units, an increase of 0.6% compared with the same period last year.

Car: 1-8 months, China’s automobile production and marketing respectively completed 15 million 939 thousand and 16 million 104 thousand vehicles, production and sales decreased by 12.1% and 11%, respectively, which decreased by 1.4 and 0.4 percentage points respectively from 1 to July.

3. Prospects for the Future Market

To sum up, copper has been a narrow concussion since September. On the one hand, it is supported by the decrease in copper production, while the other side can not be effectively boosted. But in general, gold and silver ten are the peak season of consumption. Demand may recover somewhat.

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