On the supply side, the tight supply situation on the mining side has not abated. As of April 19, domestic spot copper refining and processing costs were 3.4 US dollars/ton; on the demand side, due to high copper prices, market consumption was sluggish, and shipments in many regions were lower than normal.
The Zhitong Finance App learned that in the short term, Huafu Securities released a research report saying that in the short term, the low processing fee level will reduce production on the smelting side or highlight the short-term supply pressure on electric copper, which is beneficial to copper prices; in the medium term, the Fed's interest rate cut is highly deterministic, making it difficult to mitigate the shortage on the mining side, supporting the upward movement of copper prices; in the long run, strong demand for new energy sources will drive the supply and demand gap to widen, and copper prices are still upward. Individual stocks: We recommend Zijin Mining (601899.SH), Jin Chengxin (603979.SH), Luoyang Molybdenum (603993.SH), and Northern Copper (000737.SZ), and focus on targets such as Minmetals Resources (01208) and Jiangxi Copper (). 600362.SH
On the supply side, the tight supply situation on the mining side has not abated. As of April 19, domestic spot copper refining and processing costs were 3.4 US dollars/ton; on the demand side, due to high copper prices, market consumption was sluggish, and shipments in many regions were lower than normal; in terms of inventory, both at home and abroad continued to accumulate stocks, and the global apparent inventory reached 454,000 tons, +154,000 tons year on year. Smelters entered an intensive maintenance period one after another in April, and it is expected that electrolytic copper production will continue to decline in April.
The main views of Huafu Securities are as follows:
Raw material side: Imports of copper ore and copper scrap have increased
Copper import and export: The volume of copper imports in March was 2.33 million tons (Chile 72.5+Peru 57.3 +Kazakhstan 16.2), +309,000 tons/ +15.3% year on year, +129,000 tons/ +5.9% month on month; the cumulative import volume for January-March was 6.988 million tons (Chile 222.8 + Peru 186.6 + Kazakhstan 39.5), +333,000 tons/ +5.0% year on year. Copper scrap: Import and export: In March, China's copper scrap import volume was 218,000 tons, +410,000 tons/ +23.0% year over year, and +66,000 tons/ +43.1% month over month. From January to March 2024, the import volume of copper scrap was 557,000 tons, +76,000 tons/ +15.8% year on year; profit: The average refined waste price difference was 5852.4 yuan/ton, an increase of 321.6 yuan/ton over the previous month, an increase of 5.8%.
Supply side: Cathode copper production and imports both increased month-on-month in March
Production: The output in March was 981,000 tons, +1.5% year-on-year, and +4.7% month-on-month. The monthly operating rate was 79.66%, up 3.71 pct from the previous month; in January-March, China's cumulative cathode copper production was 2,939,000 tons, up 6.9% year on year. Import and export: Cathode copper imports in March were 296,000 tons (Congo 9.4+Chile 6.0+Russia 2.8), +55,000 tons/ +23.1% year on year, +43,000 tons/ +17.1% month on month; cumulative import volume in January-March was 907,000 tons, +160,000 tons/ +21.4% year on year; profit: spot TC accelerated decline in March, which led to a decline in copper smelting profits. Copper refining and processing costs were 11.96 US dollars/ton, -58.1% month on month; sulfuric acid price was 318.1 yuan/ton, +36.8% month-on-month.
Processing side: Copper exports improved month-on-month in March
Production: In March, China's copper production was 2 million tons, -6.5% year on year; import and export: 90,000 tons of copper in March, -17,000 tons/ -15.8% year on year, +24,000 tons/ +36.5% month on month; cumulative export volume in January-March was 233,000 tons, -13.0% year on year.
Terminal demand: In March 2024, the apparent demand was 1.253,000 tons, +6.6% month-on-month
Terminal demand: The performance of household appliances exceeded expectations, with air conditioning production of 308.33 million units in March '24, +13.2% year on year; -20.7% of housing completed area in March '24; 863 million units of new energy vehicles in March, +86.2% year on year; cumulative PV output in January-March was 125.881 million kilowatt-hours, cumulative YoY +20.1%.
Macro analysis: The Fed's inflation data hit market expectations of interest rate cuts, and the first rate cut was postponed until September
The US CPI rose 3.5% year on year in March, a new high since September 2023. The core CPI rose 3.8% year on year, higher than expected for the third month in a row; the US PPI rose 2.1% year on year in March, a new high since April 2023. Inflation data that has been heating up over the months has dampened market expectations for the Fed to cut interest rates. According to CME Federal Reserve observations, the estimated time for the first rate cut this year has been postponed until September, and interest rates have only been cut twice during the year.
Risk warning
Domestic and foreign demand declined; crude oil prices fluctuated sharply; trade policy changes affected industrial layout; product prices fell.