Copper prices in international markets fell in March

Japan's earthquake may drag on economic growth, the European Central Bank said it is possible to raise interest rates, China's GDP growth rate target for this year triggered concerns about China's demand, and China's first-quarter imports fell, and other factors affect LME copper prices for three months. The decrease was 4.2%.

1. Supply-demand relationship: According to the estimated data of CRU, in the first quarter of 2011, the output of refined copper in the world was 4.604 million tons, and the consumption was 4.59 million tons, with a surplus of 13,000 tons.

2. European market: Due to the low demand and increased supply of scrap copper, the European market for copper rose from 50 to 95 US dollars / t to 30-65 US dollars / t. According to some buyers, semi-manufacture manufacturers use more scrap metal in the production process because of a more abundant supply of scrap copper, and the premium for refined copper is lowered. Because demand is reduced, scrap copper has a price advantage. The highest premium was recorded in Rotterdam warehouses. The premiums for Germany and Italy were at the low end of the above premium. The supply of scrap copper in the European market has increased as demand from Asian buyers has decreased. There is no arbitrage opportunity for copper prices in Shanghai and London, and Chinese dealers do not buy much copper in the European market. Since the beginning of the year, LME copper stocks have increased by nearly 8%, which is another sign of weak demand. The unstable situation in some countries in the Middle East and North Africa has led to a significant increase in oil prices, which has a negative impact on the economy and also has a negative impact on industrial metals, including copper. Although analysts expect copper prices to remain high in 2011, high prices will have an impact on the cash flow of buyers.

3. US market:

Early: Spot copper premiums were 4.5 to 5.5 cents/lb, and small batches or last-minute orders were as high as 6 cents/lb, although there were few transactions. Most buyers have long-term supply contracts, and buyers in the spot market may be eager buyers. If you sign a long-term supply contract, the rise in oil prices will have little effect on buyers. If you purchase on the spot market, generally speaking, the rise in oil prices will affect the increase in water prices.

Mid-term: Due to rising energy prices, PLATTS reported that the water rose to 5-6 cents per pound, based on COMEX prices. Rising freight rates have led to rising water rates. The fuel surcharges imposed by road and rail transport companies have all increased. In the past few weeks, the price of oil in the United States has shown an upward trend, because the instability in the Middle East and North Africa has led to an increase in oil prices in the international market. Some buyers paid as much as 6.5 to 7 cents per pound of copper, which is the case for rush delivery. Despite the increase in shipping costs, the actual turnover was very small. Buyers still take the strategy of buying and using them to see if they really need it. Some people doubt whether the higher premium demanded by the supplier can be answered by the buyer.

Late in the day: Market sources said buying of scrap copper from Chinese buyers increased, which may mean increased demand. This is usually a precursor to the growth in refined copper demand. When Chinese buyers are ready to enter the market, they tend to start from the least costly source. When this source of supply becomes tight, they will purchase refined copper. The earthquake and tsunami in Japan have had little immediate impact on the copper market. Some people have already foreseen the future reconstruction of Japan and have already made relevant preparations. Some people said that the rise in freight rates and lack of transportation tools kept the premium at 5-6 cents, and some people offered quotes as high as 7 cents. PLATTS reported that the premium was still 5 to 6 cents.

4. Japanese market: Due to the impact of earthquakes and overhaul of equipment, the factories of three major Japanese copper production companies have stopped production. The supply of copper in the Japanese market will be tight. The three plants are the Saganoseki plant with an annual output of 450,000 tons, the Onahama plant with an annual output of 260,000 tons, and the Hitachi plant.

The copper premium paid by Japanese buyers was as high as $80/t, and some traders speculated that Japanese buyers were eager to purchase copper because of a reduction in the production of copper smelters in Japan. There are rumors that the Japanese trading company from Chile Codelco purchase 10,000 tons of supply, from Chile Enami company to buy 2000 tons of supply, shipped in April, the premium is 80 US dollars / t.

5. Southeast Asian market: After the LME copper price dropped, some Southeast Asian dealers raised the copper premium in Singapore warehouses. After months of market sluggishness, traders hope to use copper price adjustment opportunities to attract buyers into the market. Within 10 days after LME's 3-month price fell by almost $1,000/t, some traders raised their copper from Singapore warehouses from $30/t to $35/t. Since the beginning of the year, the premium for warehouses in Singapore has been between $30 and $60/t, but transactions have been limited. In mid-February, the LME copper price rose to US$10,100/t, and the price fluctuations caused buyers to wait and see. However, copper prices have fallen by 8.5% since March. The sharp fluctuations in prices made transactions less frequent. When the price fluctuates at the $10,000/t mark, buyers will take a wait-and-see attitude because of fear. When the price fluctuates at the $9,000/t mark, buyers’ purchase intention will be greater.

6. Copper concentrate: According to the data of CRU, the global copper concentrate production in the first quarter of 2011 was 3,930,300 tons, and the smelting enterprise demand was 3,169,900 tons, and the actual gap was 34,000 tons.

According to industry sources, the spot copper concentrate processing fees charged by Chinese copper smelters in March reached US$120/t and 12 cents/lb, up from US$70 to US$80/t and US$7-8/lb in February. 60%, because the tight supply of concentrate in China has eased after the earthquake in Japan. Although overseas market sources stated that Chinese smelting companies want processing fees to reach US$150/t and 15 US cents/lb, the actual transaction processing fees are US$120/t and US$12/lb. In January, Tongling and BHP signed annual processing fees of US$72/t and 7.2 cents/lb for 2011, a 55% increase from 2010’s US$46.5/t and 4.65 US cents/lb. However, domestic copper industry experts believe that the current high spot copper concentrate processing fees may not last long, because the second quarter will be the peak season for copper demand, and the demand for copper concentrates will also increase, which will inhibit the increase in processing fees.

7. Domestic market: According to customs data, in the first quarter, China imported 90,402 tons of unwrought copper and copper materials, a decrease of 16% over the same period of the previous year. According to the National Bureau of Statistics, China's refined copper production was 795,000 tons from January to February, an increase of 7.9% year-on-year, and copper production (metal) was 174,000 tons, an increase of 8.1% year-on-year. Copper production was 1,305,000 tons, a year-on-year increase of 15.2%.

8. Industry opinion: International investment banks have lowered their copper price expectations. Goldman Sachs believes that due to the situation in the Middle East and North Africa and the impact of the earthquake in Japan, there is a risk that the international copper price will be lowered. Merrill Lynch believes that copper prices will be lowered to $8,500/t in the second quarter.

Affected by the earthquake, all copper smelters in Japan have stopped production. The country produced 1.52 million tons of copper last year, mainly importing copper concentrates for smelting. The industry believes that although Chile’s copper exports to Japan may be affected, China’s smelters have sufficient capacity to absorb Chile’s copper exports to Japan.

A domestic commodity analyst said that the impact of the Japanese earthquake on copper prices is only temporary, and that the Chinese factor and the global market fundamentals play a greater role in pricing. Although Japan’s earthquake news has caused the recent market sentiment to be sluggish, it is estimated that the market will return to bull market from April to May. At that time, Japan’s earthquake has passed and global demand will support the price this year. Analysts in other domestic metal markets believe that the impact of the Japanese earthquake on the global steel industry is greater than that of the copper market. Japan’s share of global copper consumption is relatively small, which is an important factor. An analyst from a Chongqing securities company said that from the perspective of production capacity, the Japanese steel industry has had more production capacity than the copper smelting company had shut down because of the earthquake. Therefore, the Japanese earthquake has a greater impact on the global steel industry than the copper market. .

China's large-scale copper smelting companies believe that the Japanese earthquake will have little impact on its business because of the small number of products exported to Japan, and the current domestic inventory is huge. As the largest smelting company in China, Jiangxi Copper’s raw material sources mainly come from South America and Australia. The company said that the Japanese earthquake had no adverse impact on its business. Yunnan's copper industry is also roughly the same, the company does not export refined copper. As the world's largest copper consumer, China is a net importer of refined copper in Japan, accounting for 40% of Japan's exports. Recently, Japan’s copper exports may be reduced. Market participants do not think that it has a significant impact on Chinese copper smelting companies. At present, the number of domestic bonded warehouse stocks may reach as high as 800,000 tons, and the previous period will be 600,000 tons. Much more than normal. Chilean copper miner Antofagasta stated that it is estimated that the global supply and demand gap for the refined copper market in 2011 will be 440,000 tons.

The recent price is expected to rise slightly.